The main purpose of the report will be to analyze Hong Kong and Shanghai Banking Corporations (HSBC) Premier proposition (PP). The author will be analyzing the product proposition using a SWOT analysis frame work on HSBC Premier. Based on the result of the analysis the author will highlight as to why HSBC has chosen to cater the high end society. The report also showcase as to why the PP is focused on this particular market segment. Followed by the author conducting a study on the requirements and expectations of Premier Customer (PC).
Based on the identified factors the author will illustrate how the PP has being designed to address the clients requirements by using the concept of relationship banking through their specialized employees. The report will also emphasis on the importance of HSBC being customer centric. Supported through changes done to the marketing mix in order to achieve the goal of customer care. In conclusion the author has conducted a research to track the total customer experience.
HSBC is a leading multi-national organization which has been operating in the financial industry in Sri Lanka for over 120 years (Refer Appendix A.1). Being an organization which has both local and international expertize, HSBC has a competitive advantage in positioning their products and services in the market. HSBC caters both corporate and Retail Banking segments with a wide range of product propositions.
As the newly appointed marketing consultant for HSBC Premier (Refer Appendix A.3), the author will be conducting a market research to find out the factors as to how HSBC PP can be improved.
During the market study the author will be conducting a research on areas like working business culture and marketing concept, segmentation of the product in line with its customers, analyzing the customers needs wants and value expectations of the proposition, creation of customer-based value propositions for each of the segments, developments through relationship marketing and customer care, the organizations branding strategies, research studies related to customer experience and the outcome of been an organization which is more customer centric.
The working business culture and marketing concept
Considering the business culture, HSBC is an organization exposed to many international trends and working environments. From retaining years of experiences in the financial industry HSBC has identified how the organization should adopt itself according to the local culture and trends. In order to localize the organization has invested in the areas such as product development, pricing, branding, market research and relationship marketing. Which eventually covers the marketing concepts of HSBC. These concepts are used by the top level management as strategic concepts in order to make decisions and processes to cater to customer requirements and expectations. Through these concepts HSBC has being able to align the Premier Proposition (PP) according to the current market conditions.
Product development and Pricing
In order to sustain their market share HSBC PP is been reviewed and developed annually by the marketing department. Product development has being focused based on the following market conditions. The emergence of local and international competition: In the recent past there have being many number of financial institutes starting to introduce similar product propositions as HSBC Premier. Eg :Nations Trust Bank : Private Banking
Standard Chartered Bank: Priority Banking
Fragmented markets and sophisticated customer needs, wants and demands: The emergence of sophisticated customers such as investors, directors of multinational companies, businessmen who each have diverse needs wants and demand expectations from the bank.
Technological advances in the financial sector: HSBC has being successfully been able to achieve this by offering the best consumer internet. The organization has being offered the award by Global Finance. HSBC uses a price premium strategy in the PP which has made the product to be exclusive and appealing to the high end society of Sri Lanka. By using this strategy HSBC has been able to acquire over 6000 Premier Customers (PCs) who each maintain over Rs 7,500,000 in a portfolio. This in return has given them to generate Rs 45 Billion in deposits.
Every product requires a strong branding technique.
HSBC uses the following branding methods to showcase the benefits of PP. Online marketing
Electronic Direct Mails
New paper and magazine advertising
Consumer sales promotions
As per the methods mentioned above HSBC has focus in showcasing the lifestyle of a PC and the benefits that could be achieved by being part of the growing PP. The next goal by branding would be to acquire potential customers through displaying benefits compared to the competitors.
Market Research and Relationship Marketing
HSBC invests a large proportion of resources on market research and development. Which eventually result HSBC a cutting edge among competitors. This market research and development is conducted through HSBC head office in Hong Kong at regular intervals. By doing so HSBC has being able to identify new global trends and investment opportunities which they have being able to include within the PP. In order to customize and align the global trends and investments according to the Sri Lankan market, the local marketing department conduct research. These researches are conducted through client survey calls, mystery shopper programs and customer feedback forms.
This has provided the opportunity for the management to gain a descriptive insight of the service pros and cons offered to the PC. Customer being treated as king in todays business world HSBC believes customer centric relationship marketing is the critical selling factor of the PP. In order to complement this factor Relationship Managers (RMs) have being groomed to be customer oriented, which will enable to provide a personalized service package. Based on the study carried on HSBC Premier the author will explain the current position of the organization and explain the desired position to be in through his suggestions.
Understanding customers and segmentation
A PC is an individual who banks at HSBC for the purpose of receiving exclusive customized service, global recognition, safety of their funds and investment advice. By performing a SWOT analysis on HSBC Premier the author has being able to highlight why HSBC has selected the particular segment of high income earner both locally and internationally.
HSBC is a brand which provides their clients a global recognition through HSBC Premier. Expertise in the financial industry both locally and internationally. Including modern technology into their services.
Priority services for all international banking services through Global Premier Centres. Customizing the products and services according to the local culture. Dedicated RMs who would manage the clients financial requirements 24 hour Premier Call Centre (PCC)
Emergency credit facilities.
Exclusive promotions for PCs both locally and internationally.
Limited bank branches around Sri Lanka.
Offering low interest rates on fixed deposits and savings accounts.
Being an International brand the organization is vulnerable for strict government rules policies.
Having only 2 Premier Centres in Sri Lanka to cater to over 6000 PCs.
Unavailability in developing new wealth management products for clients with high investment appetites.
Having a low workforce to attend to each PCs requests.
Limiting the eligibility criteria for HSBC Premier.
Having only one PCC to attend to over 6000 PC calls.
By growing the premier portfolio the organization will be able grow the HSBC brand Value. Developing newer technological advances in line with the Central Bank of Sri Lanka would assist in making the product more attractive. HSBCs Global recognition which would attract clients.
Constant R&D provides new dimensions to a growth.
Individuals who aspire to become a PC.
Global international support through the HSBC group.
Competitor banks starting to offer similar propositions.
Central Bank regulations which limits cross border transactions. Losing customers who are rate sensitive
Reputational risks from miss selling HSBC Premier.
Vulnerability to attract money launderers who would tarnish the HSBC Premier brand name. Global recession impacts on HSBC
High priorities given to local banks.
Table -SWOT Analysis
Different PC individuals have diverse expectations from HSBC. In order to meet these high client expectation levels HSBC conduct thorough staff trainings, workshops and knowledge sharing sessions. Based on the product exclusivity it shows that HSBC has segmented in clients who seek global recognition and quality service even though they do not offer competitive return on investments. Further the client base can also be segment according to the below listed eligibility PC criteria. 1. Clients maintaining a portfolio balance of Rs7,500,000 In Sri Lanka 2. Overseas PCs maintaining the required balance in their home country All though this protects the products exclusivity it has limited the organization expanding their market share. In order to overcome this limitation the author suggests that HSBC to introduce new entry criteria to become a PC. Market research shows competitors also offering similar products under the following entry criteria.
Nations Trust Bank (Private Banking eligibility) -Rs 5 million or equivalent in foreign currency, in deposits Total relationship of Rs 10 million in both deposits and loans Repurchase Agreements (REPOs) and/or investments of Rs 20 million. Standard Chartered Bank (Priority banking eligibility)-Total relationship in Fixed deposits Rs5, 000,000/- Commercial Bank (Elite Banking eligibility)-Total deposit relationship in excess of Rs 7.5 Million in a savings or fixed deposit account. In order to gain the completive advantage and grow the profit margins for the business sustainability the authors suggestion is to remake entry criterias to become a PC. This will also open doors for potential customer segments and new business opportunities where competitors have still not approached on.
Authors entry criteria suggestions:
Maintaining Rs5,000,000/- in a non-interest bearing current account and granting of an interest free overdraft facility of Rs2,500,000/- which would attract Islamic Banking clients. Maintaining Rs5, 000,000/- in a fixed deposit and granting an overdraft facility against in which will attract clients who like to invest in the Stock market and other instruments. Offering Premier for top Directors of Companies such as MAS, Nestles, Fonterra, MIT so that they would be brand ambassadors for the Product. Introducing Premier for clients with large credit facilities which are more than Rs10, 000,000/- these clients would give a high income to grow the premier portfolio.
Analyzing needs, wants, values and Expectations of Customers As indicated above a HSBC PC contains diverse set of expectations and requirement through this package. This requirements and expectations vary from individual to individual. HSBC has being able to identify these client expectations based on the research performed by their research and development team. Analyzing needs and wants
The success of HSBC PP is based on how the organization meets the customers expectations. Based on the market studies performed on the client base the author has being able to identify what are the needs and wants of the clients.
Easy access to their funds.
Ability to withdraw funds at any given time.
Reliability on the invested money at HSBC.
To have the assurance that the invested money is secured at HSBC. Return on investment.
Preferential interest rate for savings accounts and fixed deposits. 24 hour assistance in financial needs.
24X7 customer support.
Commendable customer relationship.
To receive a tailor made service from HSBC.
Ability to obtain credit facilities.
Ability to request for credit cards, loan facilities and overdraft facilities on demand. Priority services in transferring funds globally and assistance in opening accounts overseas.
Hassle free money transfers with global accounts
Table Analyzing needs and wants
Values and Expectations of a HSBC Premier customer
The relationship between a HSBC PC and the bank is built around the values presented by the organization.
In order to achieve clients expectations HSBC works hard along with their set values.
The below list contains the relationship between the PCs values and expectations.
Offering a fair Interest rate on the Fixed deposits within the bank.
Honesty and integrity.
To create transparency on the fees and rates of the bank.
Ability to understand and address the clients requirements.
Excellent two way communication with the RM and client for a better service.
Assurance for the clients financial safety.
Customized clients service package.
High dependability on their personal and official financial matters.
To be recognized as a valued Premier client.
Table -Value and Expectations of a HSBC Premier Customer
Creating Customer-based Value Propositions for Customer segments Creating customer-based value propositions is a widely used strategy to create awareness on different customer segments. Having looked at the researchers conducted from inception of HSBC Premier the author believes the most significant factor is to address PCs expectations. Also the author believes, through catering these requirements will influence the clients decision making ability. This will result to grow the market share and generate business incomes.
Relationship Marketing & Customer Care
Relationship marketing has become one of the current important concepts of todays business environment. Relationship marketing is mainly dependent on organization policies employee skill and capabilities. Each employee plays a vital role in the process of delivering an exceptional customer service. Starting from the front level customer support to the back office support the same service level should be maintained. Factors that influence Relationship Marketing for HSBC Premier: Convenience in accessing the Premier Centres.
Efficiency of the RMs.
Strong bond between the client and the RMs.
Consistent service delivery.
The luxurious Premier Centre facilities.
Extensive Friendly support provided by the employees.
Understanding the customer requirements.
Playing honestly and winning customer trust.
Assurance of investments.
Management of customer care
The employees should always maintain high knowledge level regarding customer portfolios, requirements and up to date with organizations processes. Service Level :
All staff engaged directly or indirectly with clients should always provide
same service standards.
Maintaining consistent operations according to the set guidelines in order avoid any service lapses.
Customer Care :
Providing the best customer experience through exceptional customer care. At HSBC the management believes in building strong relationships between the business and its clients is vital. In order to full fill the above influences HSBC has built the PP around customer relationship marketing and exceptional customer care. A PC of HSBC is entitled to a RM who caters to their every financial requirement. The RMs are often closely engaged with their clients, this allows them to win the trust and understand the client. It enables the RMs to provide a better service to their clients. A satisfied customer will always improve their portfolios and recommend the product and service to others.
However during the research conducted it is evident the concept of relationship banking is blossomed from the point a client becomes a PC. Although the author strongly believes regardless weather the customer is Premier or not the bank should provide customer relationship banking. HSBC should extend their focus towards all segments and expand their exceptional customer relationship. Through conducting the above mentioned new concept the organization will be able to identify the potential clients and grow them to become aspiring qualitative PCs.
Reinforcing the organizations Identity through changes to the Marketing Mix Variables
What is a Marketing Mix?
A marketing mix is traditionally referred to as the 4Ps, which consists of Product, Price, Place and Promotion. With market evolution 4Ps has grown itself towards adding 3 more concepts like People, Process, and Physical Environment. The combination of these elements will contribute towards providing successful of the products and services.
Figure -7 Ps Concept
It can be a tangible good or an intangible service. The successfulness of a product or service is based on how it is developed and how it will cater the customer needs. HSBC has developed HSBC Premier to cater to the high end niche market. The product offers exclusivity, recognition and a wide range of benefits to its clients. Although the PP appeals to the specific pricing category it restricts HSBC in acquiring new clients. The author belief is to create a sub category under HSBC Premier to grab the clients who cannot meet the HSBC Premier requirement and not allowing them to move towards other competitors.
The price is the amount a customer is willing to pay for the product or service. It will also determine the organizations profit or loss as a product or service is only worth for the price that the chosen segment of customers is willing to pay. The price should be competitive when compared with competitors. In the end customers would choose the service which offers the best value for their money. HSBC uses a price premium strategy for the eligibility of becoming a PC. The product offers exclusivity for clients who seek global recognition and quality service. The eligibility in becoming a PC has being set at Rs7, 500,000.00. This will restrict majority of new clients in enrolling for HSBC Premier.
The reason being for the author to state that HSBC uses a price premium strategy is because HSBC historically has not offered high return on interest rates on their fixed deposits or investments, but compensates it with a superior service which retains the client from moving to competitors. However in order to grow the Premier portfolio held at HSBC the author suggests that HSBC increases the interest rates paid on the fixed deposits in order to retain the existing client base and also be able to attract the rate conscious clients from competitors.
Place is the physical location where a product or service will be offered or distributed to the customer. It should be easily accessible by the customers. HSBC Premier is offered to the clients through the HSBC Premier Centres, HSBC PCCs, the HSBC retail branch network and also through HSBC Internet Banking. Since HSBC has only 2 Premier Centres and 15 retail branches it has limited the accessibility to the public. The authors suggestion is introduce new retail branches in new locations where HSBC will be able acquire new PCs and grow their market share.
Promotion is the method used by marketers to communicate information on products or services. It includes elements such as advertising, sales campaigns and awareness programs. HSBC uses the following modes to do their promotions.
Electronic direct mailers
Most of the promotional methods used at HSBC are prepared based on the market studies performed by research teams. However at times the in accuracy of the market study and poor promotional communication methods would fail to meet the customer needs. Based on the authors experience he advises that HSBC use a two way communication method when setting up their promotions. This will enable to get the clients feedback on the promotion as well as to answer any of the queries that the client has regarding the promotion.
People play a vital role in the service industry. They create a positive or negative impression toward the client which will eventually impact the organization. It is always important that the staffs are well groomed and motivated when they deliver their service to client. HSBC Premier is built around addressing the clients requirements through relationship banking. Therefore it is important that HSBC recruits the right people with right skills and attitude to carry out their processes. The level of support and service granted by the RMs will determine whether the clients will retain at HSBC or weather the will move to other financial institutes.
The processes set within the organization contribute to the end result of customer satisfaction. A PC is not interested on how the set systems work at HSBC, but what they are interested is only to get their job done. It is important that HSBC evolves their system up to date with high efficiency and productivity. This will lead toward satisfied customers. This is the ultimate goal of HSBC Premier.
The physical evidence is what a Premier client would experience from the moment they step in to a Premier Centre. During the stay at the Premier centre the customers would experience luxurious facilities. These comforts and benefits will capture potential customers through branding and through word mouth. The combination of each of the above elements will contribute to the success of the HSBC PP. Research Requirements for the organization to track the total customer experience
What is Marketing Research?
It is a systematic module which is used to collect data for analysis and reporting purpose on a specific marketing situation faced in an organization. Companies use these research results in various situations. This helps the organization to measure the customer experience. The research results will enable the marketers to improve their products or services. Commonly organizations have their own in house R&D team and however some companies tend to conduct this market research through 3rd party specialized organizations.
Importance of Marketing Research for HSBC
As the time past banks have gradually evolved themselves to introduce new products and services. This has increased the competition amongst financial institutes who are striving to be the best. While each bank offers similar products and service packages. The differentiation is dependent on the services and after sales. While HSBC understands the importance of marketing research they have sub contracted high level research studies for specialist such as AC Nielsen Corporation. At the inception of HSBC Premier the organization used research studies from the Primary data acquired through Surveys, data collections, focus groups and interview. Based on these research studies carried out HSBC was able to develop the global proposition.
For further development and changes to HSBC Premier the organization carries out secondary data research studies by purchasing research studies done by specialists, collecting data of customer courtesy calls, mystery shopper programs, branch observations, suggestion boxes and testimonials left by other PCs. Once the information is collected HSBC uses it to understand the lapses that they have in terms of service, competitor interest rates, product features and benefits which affect the total customer experience. Based on the experience at HSBC the author suggests that the research should be carried out by using the Primary research studies in order to track the total customer experience.
Although collecting of data can be costly through primary research methods it is accurate and easy to understand the customer as listed below. Primary research can be obtained by research performed on existing PCs. The research can be tailored according to the requirement of the organization. It helps you understand the type of client which does business with you. Since it is an in-depth research done the data would not be available for competitors. The organization has the freedom the set the parameters of the areas they wish to perform the research studies on. Collected data would be qualitative and quantitative.
Figure Research frame work
The objective of the research is to identify the total customer experience that a HSBC PC under go.
At the research design stage, the marketer or the organization would follow a set of guidelines carried out the research. The different stages of a research are as followed.
Figure -Research Design
Data collection to be done according to the above research design using the existing client based and the potential client base. Data Analysis:
Data analysis is a process of transforming acquired data in to qualitative and quantitative information for the use of the marketers.
The research report will be the end result of the research process. The report would highlight the areas which require development and the areas which have service lapses. This will enable HSBC to develop them self as an organization. The author believes it is vital that HSBC continues and improves their research methods in order to be on top of the financial industry. Through performing and tracking the total customer experience which a PC goes through HSBC will be able to adjust and make changes to the processes which are in use.
The outcomes of becoming more customer centric
In every organization the customer is treated as the king or queen. Therefore each organization wishes to be customer centric. They build their businesses around the expectations of the targeted customer segments. At HSBC the working business culture and marketing concepts are aimed and designed according to its target market. The process of choosing the segment of high end customer and to cater them with the product HSBC Premier was done under the customer segmentation process. Once the segmentation was done HSBC choose to analyze the needs, wants, values and expectations of a PC. This enable the organization to tailor make the benefits for a PC at HSBC.
This in return creates a global value proposition for each PC. A key area in being a customer centric organization is the capability of building strong relationships with the clients. At HSBC Premier the concept of using a RM has enable the organization to identify in-depth information regarding their base of PCs. It has also enabled HSBC to discover the clients hidden needs and also create needs within them in order to grow the Premier portfolio. By addressing these requirements HSBC has being able to enhance the customer experience derived through HSBC Premier. The author suggests that HSBC continues to conduct primary research which gives the organization in-depth information regarding how and where the organization is heading towards.
The conducted research would stand as an indicator to identify on the changes that the organization could do to its marketing mix variables to achieve customer satisfaction. Becoming an organization which is customer centric would contribute to the sustainability of the company. It will act as a guide in the companys long term vision to enable them to align the business and its processes accordingly. By doing so the organization would be able to increase the customer experience levels and values.
The overall report is a critical analysis on HSBCs PP. The author has identified the working business culture and marketing concepts used at HSBC. Based on the study the report illustrates the importance of designing HSBCs PP in line with the chosen customer segments expectations. Having being a customer centric organization, HSBC has being able to identify its customer requirements through market researches and adaptation of relationship banking.
Having identifying a PCs necessities the organization has being able to make changes to its marketing mix variables in order to increase the total customer experience. The PP in general, can be measured as one of the most consistent propositions which offer exclusive financial services. In order to sustain HSBCs PP the author recommends that the organization develops its strategies and reduces the service lapses based on the suggestions made.
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A.1 About HSBC
HSBC is a financial organization which opened in Sri Lanka on the 1st of July in 1892. The bank initially opened for business under the name of Hongkongbank thereafter was named as the The Hong Kong and Shanghai Banking Corporation and in the more recent years operates under the name HSBC. HSBC currently has over 6,600 offices in over 80 countries and territories and assets of US$2,692 billion as at 30 June 2012 according to (HSBC, 2013) This Makes HSBC one of the largest Financial Organizations in the world. Since 1892 HSBC has supported and contributed to the Sri Lankan Economy and is currently one of the most Profitable Banks in Sri Lanka.
A.2 Products and Services offered by HSBC
HSBC uses the influences of their international expertise, their local knowledge and experience in order to build the Products and Services they offer. This puts HSBC in a good position to compete with the local financial organizations. HSBC offers propositions to its clients. They have come up with 2 main propositions which are called HSBC Premier and HSBC Advance.
A.3 About HSBC Premier
This product is offered to HSBCs top end clients who are the high income earning segment of society. It would be clients who are well established in life and lives a lavish lifestyle. HSBC Premier comes with a bundle of value additions and exceptional service standards. Such as a Relationship Manager who will look in to the clients every financial need, preferential rates, fee waivers and preferential promotions positioned only for Premier Clients. HSBC has set the minimum eligibility of becoming a Premier Client at maintaining Rs7, 500,000/- in a clients portfolio.