Professional Documents
Culture Documents
HSBC
Table of Contents
Executive Summary....................................................................................................................................... 2 INTRODUCTION ........................................................................................................................................ 3 Company profile ......................................................................................................................................... 4 1. Market Segmentations .......................................................................................................................... 6 1.1. Geographic Segmentation: ................................................................................................................ 6 1.2. Demographic segmentation: ............................................................................................................. 6 1.3. Psychographic Segmentation:............................................................................................................ 7 1.4. Behavioral Segmentation: .................................................................................................................. 7 2. Market Targeting ...................................................................................................................................... 8 2.1. Selection of Target Market ................................................................................................................ 8 2.2. Evaluation of Target Market ............................................................................................................ 13 3. Positioning............................................................................................................................................... 14 3.1. Value proposition ............................................................................................................................. 15 4. Marketing Mix ......................................................................................................................................... 17 4.1. Product ............................................................................................................................................. 17 4.2. 4.3. 4.4. Price ............................................................................................................................................ 20 Place ............................................................................................................................................ 22 Promotion ................................................................................................................................... 22
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Marketing Strategies
HSBC
Executive Summary
HSBC is a global banking and financial service company headquartered in London, United Kingdom. As of 2011, it was the world's second-largest banking and financial services group and second-largest public company. It has around 7500 offices in 87 countries and territories across Africa, Asia, Europe, North America and South America and around 100 million customers. As of 30 June 2010, it had total assets of $2.418 trillion, of which roughly half were in Europe, a quarter in the Americas and a quarter in Asia. HSBC Holdings plc was founded in London in 1991 by The Hongkong and Shanghai Banking Corporation to act as a new group holding company and to enable the acquisition of UK-based Midland Bank. The origins of the bank lie in Hong Kong and Shanghai, where branches were first opened in 1865. Today, HSBC remains the largest bank in Hong Kong, and recent expansion in mainland China, where it is now the largest international bank has returned it to that part of its roots. This report provides the details of HSBCs marketing strategy. HSBC divides the market into different segments, evaluates the product and uses local marketing to provide the best service to its customers.
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Company profile
HSBC Holdings plc is a global banking and financial services company headquartered in Canary Wharf, London, United Kingdom. As of 2011, it was the world's second-largest banking and financial services group and second-largest public company according to a composite measure by Forbes magazine. It has around 7,500 offices in 87 countries and territories across Africa, Asia, Europe, North America and South America and around 100 million customers. As of 30 June 2010, it had total assets of $2.418 trillion, of which roughly half were in Europe, a quarter in the Americas and a quarter in Asia. The shares of this company have been taken by various shareholders all around the world. It has 220,000 shareholders in 124 countries which speaks volumes about the goodwill of the company. HSBC Holdings plc was founded in London in 1991 by The Hongkong and Shanghai Banking Corporation to act as a new group holding company and to enable the acquisition of UKbased Midland Bank. The origins of the bank lie in Hong Kong and Shanghai, where branches were first opened in 1865. Today, HSBC remains the largest bank in Hong Kong, and recent expansion in mainland China, where it is now the largest international bank has returned it to that part of its roots. HSBC runs a number of operative systems to assure its global successfulness. In particular, HSBCnet is the Groups global service that coordinates local business needs and offers functional services to the operating spots worldwide. At that, both corporate and individual customers obtain access to banking transactions, trade services, exchange operations and money trading services. In addition to this, HSBCnet is widely applied as the marketing tool to promote the Banks e-commerce services. At present, the HSBC group provides a comprehensive range of financial services namely: Personal Financial Services: It has over 100 million personal consumers' worldwide (including Consumer Finance customers). It provides a full range of personal finance services, including current and savings accounts, mortgages, insurance, loans, credit cards, pensions, and investment services. It is one of the world's top ten issuers of credit cards. Consumer Finance: The Company's Finance Corporation's consumer finance business ensures point of sale credit to consumers, and lends money and provides related services to meet the financial needs of everyday people. In 2004, it completed the integration of its former household businesses. Commercial Banking: HSBC is a leading provider of financial services to small, medium-sized and middle market enterprises. The group has over two million such customers, including sole
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proprietors, partnerships, clubs, and associations, incorporated businesses and publicly quoted companies. In the UK, 209 Commercial Centre were launched to provide improved relationship management for higher value small-medium-sized enterprise customers, while in Hong Kong, Business Banking Centers, were expanded to provide a one-stop service. Corporate Investment Banking and Markets: Tailored financial services are provided to corporate and financial clients. Business lines include Global Markets, Corporate and Institutional Banking, Global Transaction Banking, and Global Investment Banking. Global Markets includes foreign exchange, fixed income, derivatives, equities, metals trade, and other trading businesses. Corporate and Institutional Banking covers relationship management and lending activities. Global Transaction Banking includes payment and cash management, trade services, supply chain, securities services, and wholesale banknotes businesses. Global Investment Banking involves investment banking advisory, and investment banking financing activities. Private Banking: HSBC is one of the world's top private banking businesses, providing financial services to high net worth individual and families in 70 different locations.
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1. Market Segmentations
1.1. Geographic Segmentation:
Market segmentation strategy of HSBC where by the intended audience for a given service is decided according to geographic units such as countries, cities etc. 1.1.1. Country/World Region: HSBC is organized by business line (personal financial services, consumer finance, commercial banking, corporate investment banking and private banking) by geographic segments1. 2. 3. 4. Asia Pacific U.K. North America/NAFTA South
America
1.1.2. City/Metro City: HSBC is more willing to open their branches in the big, developed and crowded cities or areas as they want to attract the higher class people. But they also have some branches in small and undeveloped cities also. 1.1.3. Density: Most of the HSBC branches are in the urban areas. They hardly open their branches in rural areas. HSBC divides the market on the basis of different geographic units such as urban market, rural market, eastern market, western market, etc.
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1.2.2. Religion: HSBC has special services for different religions. For example, HSBC has "Islamic Banking System" with their traditional banking system especially for the Muslim countries. For example, they offer Amanah, Amanah Personal and Amanah Corporate for Muslim customers. Education HSBC likes to deal with educated people, as they are easier to deal with. 1.2.3. Occupation: HSBC likes to deal with professional and technical; managers, officials and proprietors; clerical sales; craftspeople; forepersons; operatives; farmers; retired; students; homemakers 1.2.4. Family life cycle: HSBC provides different services for different stages of life cycle. HSBC follows young, single; young married, no children; young, married, youngest child under 6; young, married, youngest child 6 or over; older, married, with children; older, married, no children under 18; older, single; other
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On February 08, 2011 in London - HSBC Bank plc announced that HSBC Net, its global online banking solution, has maintained its position as one of the leading electronic banking platforms for corporate and commercial clients globally, according to results of the 2010 Greenwich Associates Online Services Benchmarking study.
The study ranks HSBC net in the top spot among global banks in the areas of Usability/Ease of Use and Integration/Organization, while demonstrating Best of Breed features in the areas of Look and Feel, Cross Product Integration and Transaction Search/Item Inquiry. HSBC net outperforms the peer group on more than half of the evaluation factors, with improvements noted by Greenwich Associates since 2008 in the areas of Online Help/Support, Education/Training, Security Features and User Authentication. HSBC serves 16.1 million customers in the UK and employs approximately 56,000 people. In the UK, HSBC offers a complete range of personal, premier and private banking services, commercial banking for small to media businesses and corporate and institutional banking services. HSBC Bank plc is a wholly owned subsidiary of HSBC Holdings plc. HSBC net is a global online banking platform for corporate and commercial customers, offering a comprehensive suite of cash management, trade and supply chain, securities solutions. Client sphere is a patent pending cash management solution implementation platform developed by HSBC. The robust project management and communication platform can be used by HSBC, clients and third party vendors during an implementation project. It fosters visibility and control of implementation project progress, and alignment among all parties, regardless of their geographical and organizational boundaries. Its streamlined processes and embedded best-practice workflows enhance regional consistency and efficiency, thereby enabling swift and seamless cash management solution delivery.
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Rivalry among existing competitors: Barclays, CITI Bank, Standard Chartered, Fortis and Deutsche Bank.
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Buyer price sensitivity (HIGH): Interest Rate and service charge is sensitive indicator for customer in bank industry, customer may due to those indicators to draw out all or a lot amount of capital from bank to bank/ other financial institution. The switching cost of this action is low. Availability of existing substitute products (HIGH): Many substitute product or service present in recent year, such as currency exchange, insurance and loan. They mainly provided by other financial institution.
Bargaining power of Supplier (Low): Bank capital supplier (Low): Depositor also is capital supplier of bank, they will compare with other financial product to see whether draw out capital or not. Computer equipment supplier (Low): The concentration ratio of computer is high, many companies use IBM, but it doesnt mean other computer companies are not good, such as Sun Microsystems, Fujitsu and Hewlett-Pack also provide similar computer equipment and solution. Credit Card supplier (Medium): Credit Card industry is a high concentration ratio industry, VISA, Master Card and American Express is the most popular credit card in the world. Although other organization also release credit card system, such as JCB, there market share in the world is much less than these three organizations. Moreover, these three organizations brand name is louder than other organizations, so the switching cost from these organizations to others may be too large.
Threats of new entrants (High): When many countries and cities join WTO and the Internet effect, the barrier of bank become disappear. Many financial even non-financial organizations can easily entry to bank industry. They can use more little money to build a website; they can also integrate with other organizations. The switching cost of this behavior become smaller than before and the advantage is larger than before also.
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Threats of substitute product: Internet makes many organizations can use smaller amount of money relatively to provide similar even same service, and the service charge become smaller. Customer will due to convenience, low cost and high efficiency to change the service to other organization. Real-time money transfer (i.e. Western Union), real-time payment (i.e. Paypal), currency exchange (i.e. Xe.com) and insurance (i.e. InsWeb.com), they through Internet to provide a high quality but low service charge service. The intensity of competitive rivalry: There are many banks in the world, which are competitors of HSBC Bank, for example Barclays, CITI bank, Standard Chartered, Fortis and Deutsche Bank. The Earning Before Interest and Tax (EBIT) in 2006 of top 1000 banks in the world is 6451 billions US dollars, higher than 2005. Due to technology becomes improve; financial control become release and the change of environment in the society, competition between banks become violent and the maturity of financial market in western country is very high, so the competitiveness force bank to find other profit continuously.
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HSBC has discontinued mass marketing and use segmented marketing a little. They use niche marketing more than segmented marketing. But their real focus is on local marketing and that is the reason HSBC is called worlds local bank. The key success factors for HSBC have been advertising campaigns that illustrates HSBCs local connection to the countries and markets that they are doing business. HSBCs success rests on its ability to understand the local markets and niche markets in the countries that they reside. HSBC must continue to understand the local market and to continue to make the connection with local communities.
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3. Positioning
The banking market positioning refers to the banks based on the location of capital strength and services, having regard to the existing customers demand characteristics, develop the banks financial products and services representing its image to show distinct personality to customers. So as to establish its place in the target market (Alessandrini, Calcagnini and Zazzaro, 2008) Despite growing in almost 80 countries all over the world, HSBC has been successful in positioning itself in Worlds local bank. As the bank constantly works hard to maintain a local feel and local knowledge, customers feel comfortable to bank with an international brand like HSBC. Consequently it has ensured high customer loyalty and HSBC has been able to retain its large customer pool. HSBC is an international financial institution. It can be said that it has prominent position in the financial sector. Although it is not a major bank in other areas, however, as the group has a global management, and has strong robust strength in the banking industry, so it still plays a supporting and promoting role in financial development. Furthermore, the group itself is a large listed financial institution and has a good financial situation {Mizuno, 2004). So, it has established customers confidence in HSBC. Therefore, the banks use these advantages to attract high level depositors. As based Hong Kong bank, the general fees and business strategy are developed according to the living index of Hong Kong, so it may not meet the conditions of the rest of the world. (Palrnatier. 2007). At the same time, HSBC mainly focuses on corporate clients, businesses and high level individual customers.
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How HSBC adds value: HSBC adds value to the commercial-banking experience by managing a network of customers with complementary needs. At a very basic level, HSBC serves as an intermediary that links depositors with borrowers. Providing excellent customer service and leveraging its expertise in niche markets allows HSBC to differentiate itself from other Canadian banks. HSBC does not attempt to be a low-cost provider, as it does not have the economies of scale to compete against the larger Canadian banks. Rather, HSBC competes with a differentiation strategy.
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Top management commitment to increase brand identity and improve the electronic and branch distribution networks. HUMAN RESOURCE MANAGEMENT :
Encourages diverse industry experience; mentoring programs; extensive training for product knowledge Hires employees with diverse skills ( often employees who have worked abroad ) Creates an aggressive credit culture Promotes talented employees; high expectations; aggressive goal setting Initiates pay-for-performance bonus incentives; restructures duties to segregate sales roles from administration roles to free time for better sales people. TECHNOLOGY DEVELOPMENT : Create new cash mgmt services Improve user-friendliness of website Improve internal application processes ( reduce delivery of service time ) PROCUREMENT : Network Promotion and Contract Management Creation/improvement of international technology (i.e. internet) platforms 24/7 account accessibility from around the world.
Service Provisioning
High quality of advice. Superior trade finance services. Superior cash management services. Superior leasing services Access to unlimited funds. Global presence. Flexible service offerings; ability to customize commercial services
Infrastructure Operation
Operate branch network and selectively increase # of location. Operate internet banking. Operate phone banking. Operate ABM network. Maintain access to funds (primarily for lending purposes) Maintain close links between subsidiaries around the world.
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Commercial Banking: HSBC is a leading provider of financial services to small, medium-sized and middle market enterprises. The group has over two million such customers, including sole proprietors, partnerships, clubs, and associations, incorporated businesses and publicly quoted companies. In the UK, 209 Commercial Centre were launched to provide improved relationship management for higher value small-medium-sized enterprise customers, while in Hong Kong, Business Banking Centers, were expanded to provide a one-stop service. Corporate Investment Banking and Markets: Tailored financial services are provided to corporate and financial clients. Business lines include Global Markets, Corporate and Institutional Banking, Global Transaction Banking, and Global Investment Banking. Global Markets includes foreign exchange, fixed income, derivatives, equities, metals trade, and other trading businesses. Corporate and Institutional Banking covers relationship management and lending activities. Global Transaction Banking includes payment and cash management, trade services, supply chain, securities services, and wholesale banknotes businesses. Global Investment Banking involves investment banking advisory, and investment banking financing activities. The product must be a means to solve a problem or satisfy a want in the market. To date, overspending is a major issue in the Western world. This is the reason why the new HSBC prepaid card is included in the new current account package as a means to ensure that customers do not overspend by ensuring prudential budgeting of financial resources. Key business areas in Bangladesh Key business areas:
Retail Banking and Wealth Management Commercial Banking Corporate and Institutional banking Global Markets Shariah Compliant Banking
Types of accounts provided Personal Home Loan Personal Loan NRB Services HSBC Select Power Vantage
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Corporate Export Services Import Services Electronic DC Advising Cash Management Amanah Amanah Personal Amanah Corporate
HSBC will launch two prepaid cards, namely, the HSBCs Financial Manager and the HSBCs Budget Manager prepaid card. Both prepaid cards come preloaded with 10 after the customer pays the initial card issue fee. The Financial Manager is a way to manage a monthly budget by transferring your spending money from your bank account onto the card. It has an annual load limit of 15,000. The Budget Manager on the other hand has a smaller annual load limit of 2,000. The new HSBC prepaid cards would be fee-free while offering the same flexibility as a credit or debit card. The prepaid card however, would need to be loaded up with cash first before allowing its users to purchase products and services. The prepaid cards can also be used to withdraw money from cash machines. Real Time Balance Alerts
Real time balance alerts will be sent to the customers mobile device every time a HSBC prepaid card user purchases something. This balance update will notify the prepaid card user on the amount of money spent and the amount of money left for free. HSBC may need to team up with companies like Vodafone to provide this service. Online Banking
Another unique element of the HSBC prepaid cards are their flexibility in managing the customers financial resources. Bank customers can access the HSBC website and set standing orders on how much money to load onto the budget manager every month as long as the funds are available in their current account.
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Bank customers that pay more than 500 into their current account every month would qualify for the HSBCs Current Account Advance. Regular payments can be made through the internet or by direct standing order from the customers current account to save a specific amount every month. This feature is ideal for customers with a fixed monthly income.
4.2. Price
The pricing component plays twin roles for HSBC in the sense that it must be able to first attract customers to purchase the service and also generate revenue for HSBC. According to Adrian Palmer (2008), there are five main factors that influence pricing decisions, namely, profit maximization, market-share maximization, survival, social considerations and personal objectives. While pricing strategy is highly dynamic for other products and services, pricing for current account services have become rather static in recent years. Most banks do not require any fees to set up a current account. Banks instead rely on the money that floats in the interval when they are deposited to when they are spent in order to profit from current accounts. It is unlikely that any increases in interest rates would be able to attract customers to open up new current accounts with HSBC. The base lending rate that is now at 0.5% provides little room to maneuver for banks and other financial institutions. Adding to that is the credit crunch and declining asset prices that makes borrowing at a higher rate unattractive at the moment. The initial prepaid card issue fee should be around 10. This is in line with what competitors are charging at the moment. The catch with the prepaid card scheme is that it encourages bank customers to save. Any money that is saved is held within the customers current account and remains available for banks to provide further lending. This may prove to be highly beneficial to HSBC during times when raising new capital is extremely difficult.
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The cost of using prepaid cards Card Initial card issue Monthly fee fee Charge for Charge for Cost to ATM purchases reload the withdrawals card Nil Nil Free
9.99
9.95
2.95%
2.95%
4.95
4.95
99p
Nil
9.95
4.99
50p
Nil
99p at post office or free via bank transfer Free at post office Free at post office or via bank transfer 30p per 100 loaded at post office
10.00
Nil
1.50
2.00%
9.95
4.95
1.50
Nil
5.00
Nil (But 4.95 1.50 (plus annual fee) 2% for withdrawals over 50
2.5%
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4.3. Place
The place element involves delivering the product element to customers through appropriate methods and delivery channels. Delivery may involve both physical and electronic channels. Failure to make a service product readily available to customers would guarantee its failure regardless of how good the service product is. HSBC's international network comprises around 7,500 offices in 87 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. Offices by Region Region Americas Asia-Pacific Europe Middle East & Africa Number of offices 3,821 1,830 2,315 302
13 offices, 39 ATMs, 9 Customer Service Centers, an offshore banking unit, Offices in 7 EPZs.
4.4. Promotion
Promotion of a particular product or service is mainly done either to push the product to the customers or pull the customers to the products or service. In case of service customers are generally pulled by the service creators to the place where it is being created and various promotional strategies are adopted for this purpose. The promotion element relies on effective communications to bring awareness in the market of the service products offered by HSBC. The three objectives of the promotion element are to gain the attention of customers, provide additional information and persuade customers to purchase the product. Advertising is mass, paid communication that is used to transmit information, develop attitudes and induce some form of response on the part of the audience (Adrian Palmer, 2008).
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HSBCs advertising certainly reflects one brand value, and very much so the first one, Perceptive. All the banks current advertising materials illustrate how the bank celebrates diverse cultures and customs of people around the world, and that every individual has their own priorities and values, and that these form the basis of many important decisions, as the bank puts it. A different point of view is simply the view from a place where youre not. HSBC Through our campaign, HSBC challenges people to address their own values and discover what drives and motivates them in their daily lives, the bank says on its website. And through this journey it is our belief that what we learn from one customer will help us to better serve another. If all the marketing goals and objectives are to achieved promotion would be the most important P among all. One of the most important marketing objectives is to increase the number HNI client by 20% within the month of April. Three marketing communication tools, advertising, public relation and direct selling would be most effective in order to achieve the marketing goals and objectives. Advertising would mainly be done in electronic and print media. Online promotion would be an important factor as the number of internet users is increasing rapidly in the country. Advertising is likely to increase the awareness of the products and services of HSBC private bank. Direct selling is another technique that is likely to be very effective in increasing the number of high net worth customers. In direct selling target customers are directly approached by mail, phone or SMS. Efficient sales persons with excellent convincing skill are involved in the process. In order to achieve the target of increasing the number of HNI client by 20%, target could be divided among each of the three cities in the country. Since Beijing and Shanghai are the two major commercial hubs in the country, most of the HNI clients are likely to be living there. So, 80% of the target customers could be achieved from these two cities. Another major promotional activity that needs to be performed is to make a separate website of HSBC private bank China. Like any other HSBC website this site would also include all the details regarding the products, services and various terms & conditions. Website needs to be heavily promoted in order to rebuild the brand HSBC among the HNI market in China. Several public relation and CSR activities need to be performed in order to regain customers trust. The bank provides educational support to the poor children; it gets involved with some of the renowned healthcare institutions with the purpose of providing financial support to all those people who can not afford the cost of their treatment.
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Conclusion
From this report we can say that HSBC is an organization that helps its customers not only on big scale but also on small scale. It has gone through many evaluation stages which have created more facilities for the customers. The key of success of HSBC bank is that they use local marketing, so they must continue to understand the local market and to continue to make connections with the local communities. They should watch out for rapid changes to their target markets in local and national levels. Market positioning helps create a special place in the minds of the customers. Marketing mix is the most vital part of marketing strategies. Without a proper marketing mix, the marketing is incomplete. HSBC is one of the leading banks which does its evaluation with the changes of the technologies and provides local marketing as well as international marketing. HSBC brings customer satisfaction that helps the bank to retain its customers.
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References
http://www.spss.com.sg/data/files/pdf/stories/Financial%20Services/HSBC%20Bank%20plc.pdf http://content.householdaccount.com/hsbc_pcm/onetime/HSBCnet_Greenwich.pdf http://saxontse.drivehq.com/SMIS_HW.doc http://www.ukessays.com/essays/business/marketing-strategies-hsbc.php http://www.oup.com/uk/orc/bin/9780199290437/baines_ch06.pdf http://www.spss.com.sg/data/files/pdf/stories/Financial%20Services/HSBC%20Bank%20plc.pdf http://www.prenhall.com/behindthebook/0132390027/pdf/Kotler_CH07.pdf http://en.wikipedia.org/wiki/Marketing_strategy#cite_note-0 Class Notes and Lectures
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