Strategic Marketing Report: Australia and New Zealand Banking Group - Case Study Example

Strategic Marketing Report: Australia and New Zealand Banking Group Name Institution Course Date Executive Summary Australia and New Zealand Banking Group (ANZ) is one of the largest banking and financial service providers in Australia and New Zealand and ranks among the world’s top 100 banks. Asia happens to be one of the most attractive markets for the bank and the bank has so far established business in many Asian countries, including Singapore, Taiwan, Hong Kong, Philippine and Hawaii among others. The growth and success of the company has been driven by the growth of the Asian economies in the last two decades. However, the uncertainty about the future of the Asian economies coupled with the growing competition, macro-environmental forces and changing consumer needs and wants makes it necessary for ANZ to review it marketing strategy to maintain a competitive advantage. For this reason, ANZ should review its product, price, distribution and promotional strategies. The bank should consider not only enhancing the quality of its products and services, but also introduce new product offering that are on high demand in Asian market, such as insurance, and real estate products. ANZ should also lower its interest rates and ensure transparency when dealing with customers, open more branches in Asian cities and introduce mobile banking services. The company must also invest adequately in promotion, such as using social media, website, television, sponsorship, billboards and sales promotion. Table of Contents Executive Summary 2 Table of Contents 3 Introduction 4 Situational Analysis 4 Industry Overview 4 Competition 6 Macro-environmental Influences 6 Political 6 Economic 7 Social 7 Technology 7 Environmental 8 Legal 8 Customer Analysis 8 SWOT Analysis 9 Marketing Strategies 10 Product 10 Price 11 Place/Distribution 11 Promotion 12 Conclusion 13 References 14 Introduction Australia and New Zealand Banking Group (ANZ) is one of the largest banking and financial service providers in Australia and New Zealand. The company was founded in 1935 in Melbourne where its headquarters are located and has grown over the years to become a global brand. In Australia, ANZ currently ranks third and also ranks among the top 100 leading banks (ANZ 2015). The company offers mainly banking and financial services to customers. ANZ provides a variety of retail banking services in Australia and New Zealand where it operates more than 900 branches and over 1,500 ATMs with a customer base estimated at over 4 million (Letts 2016). Internationally, ANZ operates retail banking services in Asia-Pacific nations, such as Hawaii, Singapore, Philippines, Indonesia, and Hong Kong (ANZ 2015). Like most financial service institutions, the operations of ANZ have been affected by the financial crises and recessions in various countries, where it operates. Despite the challenges, the company has maintained good performance that has seen the company continue to grow its branches in various parts of the world. In 2015, ANZ reported revenue totaling A$21.071 billion and an after-tax profit of A$7.493 billion. ANZ is also a major employer having a workforce comprising of more than 15,152 people as at the end of 2015 (Letts 2016). Although ANZ has been success in Asian market, the performance of the company has become under threat in this region due to the changing nature of the market, such as the financial crisis. Therefore, in order for the firm to continue posting good performance in Asian region, the company must consider reassessing its marketing strategy to ensure success in the coming years. This strategic marketing plan with start by conducting a situational analysis of the financial service industry in Asia and come up with a strategic marketing plan that is appropriate for ANZ to adopt in Asia over the next five years. Situational Analysis Industry Overview Asia has emerged as the most lucrative market for multinational businesses and this applies also to financial service providers. The Asian market has been attractive to financial service providers because of the rapid economic growth that has been experienced in the region over the past five years. Currently, a number of Asian countries, which include China, Singapore, Indonesia, India, Taiwan and Malaysia ranks among the fastest growing economies in the growth (Walsh 2014, p. 2). The steady growth of the economies of Asian countries has resulted in significant growth of the financial service sector over the past five decades. Reports indicate that the largest banks in Asia have enjoyed double-digit growth in on return on equity over the last five years, enabling them to stay ahead of American and European counterparts that continue to struggle to come out of the credit crunch. Chung, Tio and Anthony (2016) report indicates that Asian financial sector accounts for about 40% of the banking and insurance market globally. The growth in the economies of Asian countries has seen the number of people opening bank accounts and making deposits grow significantly in the recent past as shown in figure 1 below. Figure 1 Source: Deloitte (2012). Despite the growth of the Asian financial service industry, the industry is projected to experience a decline in the growth mainly due to credit crunch and financial crisis that is expected to occur in the coming years. Additionally, the performance of the industry is expected to be affected by the fact that the economies of most Asian countries, such as China are expected to slowdown in the coming years. Competition Walsh (2014, p. 4) noted that, as much as banks in Asia have enjoyed stable financial growth over the years, the banks are not immune to external threats, such as competition. The industry already has many banks that compete for the share of the market. However, the existing banking service providers are under increased threat of growing competition from non-bank players that are entering the Asian market in large numbers with the aim of making banking simpler, cheaper and accessible (Chung, Tio and Anthony 2016). Across the entire Asian region, financial service market has seen increased emergence of new business models that promises to transform how transactions are conducted and how customers are served. For instance, technology giants in the region, such as FinTech and telecom operators are in a rush to grab the share of the market (Walsh 2014, p. 4). A case in point if the Alipay that began by operating as an e-commerce payment service provider but has since launched a money market fund that has been consumed by more than one-third of China’s 1.46 trillion-yuan market (Chung, Tio and Anthony 2016). Reports indicate that, in countries such as Indonesia and Philippines, financial service providers are currently under pressure from online payment service providers that have created mobile money services that allows people to transfer and receive money anywhere they are at the click of the button (Lin et al. 2006, p. 7). In countries, such as Japan, peer-to-peer lending service providers have emerged that offer attractive interest rates to investors and lenders than do banks and this threatens the continued existence of banks in these regions if they do not change their marketing strategies. Macro-environmental Influences Political The operations of banks in Asian region are greatly affected by the political factors. First, the operations of banks in the region is affected by the anti-money laundering laws that all financial service are required to comply with in order to operate in the region (Euromoney 2014). In some countries like Philippines, the government is considering repealing Bank Secrecy Laws and this will affect the operations of banks in the region (Walsh 2014, p. 1). Besides, the political instability experienced in some Asian countries, such as Taiwan and Myanmar is a threat to the operation of banks in these regions. Economic The success of financial service providers like banks is affected greatly by the state of economies of a country or region. Most Asian countries have experience immense growth that made the region attractive for business. However, the Strait Times (2016) predict that the economies of Asian countries would slowed down in the next coming years as is being seen with China whose economic growth have declined significantly in the recent past and the same applies to countries like India, Malaysia, Taiwan and Singapore. It is also predicted that the region could experience another financial crisis similar to that of the 1990s and this could result in credit crunch that might have adverse effects on the financial sector performance (Lin et al. 2006, p. 4). In the event that a financial crisis occurs as expected, this would result in declined disposable income of the population, thus resulting in declined saving and borrowing, which would have a biting effect on the Asian financial sector. Social The socio-cultural factors also have a huge effect on the operations of a company and the same applies to financial service providers. The large population consisting of the growing number of the middle class offers a big business opportunity for financial service providers in Asia. China, whose population stands at over 1.2 billion people has more than 300 million people within the middle income class (Walsh 2014, p. 6). The same large population of middle income earners is seen in other Asian countries, such as India, Malaysia and Indonesia. The growing culture of saving and borrowing in Asia also offers good business opportunity for financial service firms. However, the growing aging population in most of the Asian countries presents a threat to the performance of financial service firms because of the low propensity to borrow or invest by people of this age group. Technology Technology has had a huge impact on banks. Over the last two decades, a number of technological innovations have emerged that has transformed how customers access their money and how banks operate. The emergence of ATM has enabled customers to access their money 24/7 a week. The emergence of electronic money transfer methods has also enabled banks to transfer money around the world faster. Additionally, the financial service sector has seen a wave of increased emergence of online payment services and mobile banking systems that has transformed how customers banks and access their money or financial services. Environmental Although environmental factors impact greatly on the operation of most businesses, this factor has less influence on the operation of financial service providers, like banks (Chung, Tio and Anthony 2016). However, as part of promoting sustainability, even banks are under increased pressure from the growing population of environment conscious customers and environmentalists that want banks also to make their operations sustainable. Legal The operations of banks in Asian region are affected by laws and regulations guiding the industry. Such is the money laundering laws, customer information disclosure laws and the interest rate laws that are set by the Central Banks of various Asian countries (Euromoney 2014). Customer Analysis The growth of the Asian financial service industry has been driven by high uptake of the services by consumers. Currently, the majority of Asian people above 18 years of age have a bank account while some have multiple bank accounts. Although the majority of Asian that has a bank account belongs to the middle class, the uptake of financial services has been increasing even among the low-income earners. According to Conseguera et al. (2006, p. 98), most consumers of financial services have strong relationship with their primary bank. In this regard, it has emerged that, once a customer has opened an account with a bank, the customer tend to remain loyal to the company for at least five years. This implies that only a few customers are likely to switch to a different bank. However, the majority of those with bank accounts are urban dwellers. This trend is linked to the fact that most banks have established businesses in urban centers. SWOT Analysis Strengths Strong brand image Strong leadership team Existing wide distribution and sales network Has more than 15,000 employees Large market share in New Zealand and Australia High diversified product portfolio Offer a variety of financial services that include retail banking, investment, asset finance and payment solutions Weaknesses Limited global exposure compared to main competitors Small business units Opportunities Opportunity to grow in Asian markets, such as India and China Opportunity to enter the mobile banking market Opportunity to introduce online payment services Venture capital Threats Deteriorating economic conditions in New Zealand, Australia and Asia Increasing competition from global banks and non-banking service providers Fluctuations in banking system Marketing Strategies Product Product strategy is an important factor that will determine whether or not ANZ maintain growth and success in the Asian market. Products and services are a major factor that customers look for when choosing for a bank to open an account. In this respect, customers often choose banks that offer quality banking products and services that come in a variety of forms. Therefore, ANZ will have to ensure that it provides its Asian customers with diverse quality products and services. Considering the changing nature of the Asian financial services market, it will be important for ANZ to consider introducing more products that are in high demand in the market. Currently, the bank offer a few products, which includes financing, retail banking, investing, international services and FX, risk management, superannuation and insurance, Australian government guarantee and online security (ANZ 2015). Nevertheless, considering the nature of the Asian market, the bank should focus more on expanding its insurance product in order to remain competitive considering that the other products faces stiff competition from other banks and non-bank players. ANZ should expand its insurance product because the penetration of this product remains low in the Asian market. The Deloitte (2012, p. 3) study shows that, Asia accounting for more than 60% of the global population, the rate of insurance penetration remains very low at only 20% of the world insurance market share. In Asia, the amount of property insured is infinitesimal compared to Western countries. For instance, Indonesia incurred an estimated loss amounting to $4.5 billion in 2004 earthquake while only $500 million loss was covered by insurance (Harrison, 2010). Therefore, ANZ has opportunity to expand its insurance products in the Asian market by taking advantage of its technological advancement to help it introduce innovative insurance products that the local companies have not been able to provide to the local population. ANZ should also consider introducing real estate/housing products for customers. Studies indicate that the demand for housing products has been growing exponentially in the Asian market over the last few years as people look for a way to own their homes in the urban centers. However, because the majority does not have enough cash to construct or buy a house, they turn to the banks and other financial institutions, such as SACCOs for financing (Strait Times 2016). However, analysis of the Asian market indicate the most banking and financial institutions in the region have not introduced this product for their customers. As such, ANZ should grab this opportunity by introducing real estate product provided at low interest rates to promote growth of the bank in the Asian region. Price Price is a major factor that influences a consumer’s choice of a bank. Because most customers open banks for purposes of saving and borrowing, interest rates charged by a bank on products, such as loans is a major factor that most consumers look for in a bank. Interest rate is particularly a major factor in the Asian region, where consumers are highly price sensitive. This implies that, for a bank to succeed, it must charge affordable interest rates. For this reason, ANZ should consider lowering its interest rates on loans and other products below those charged by competitor firms in the market. Although most bank customers in Asia tend to build strong relationship with banks that last for at least five years (Conseguera et al. 2006, p. 98), ANZ can build stronger and lasting relationship with its customers by charging low interest rates on its products. At the same time, the bank must ensure that there are no hidden charges on the products, such as deposits and loans as this is a major factor that force customers to close their bank accounts. As such, the bank should ensure that customers are informed of all charges that they need to know when buying a product or a service offered by the bank. This way, customers will see ANZ as a transparent and trustworthy bank to build a lasting relationship. Place/Distribution Distribution strategy is a critical factor that determines bank success. In the modern world where there is high competition among banks, the success of a bank is largely influenced by how easy its products and services are accessible to customers. In this respect, a customer needs not to travel long distances in order to access the banking services. The same applies to ANZ that must ensure that it’s banking and financial services are easily accessible to its Asian customers to ensure success in the coming years. Fortunately, there are various strategies that the bank can adopt to achieve this. First, ANZ should consider opening more subsidiary branches in all the major cities and towns throughout Asia. Although this is an expensive move as it requires huge capital investment, the expected return on this kind of investment in physical infrastructure will be big since it will bring the banking services closer to its targeted customers in the Asian region (Walsh 2014, p. 9). Because customers now want to access their cash 24/7, ANZ will have to ensure that it distributes its ATM services in all major towns and cities, including in the rural towns as this would allow customers to access their cash whenever they need. High penetration of ATM services will give ANZ an advantage over its rivals in the Asian banking industry. ANZ should consider introducing mobile banking services to gain a competitive advantage in the Asian market. Today, most customers prefer transacting using their mobile gargets in applying and repaying their loans (Deloitte 2012, p. 6). Gone are the days when a customer had to queue in a bank to get the banking services. Therefore, ANZ should invest in the mobile banking technology as this will enable it stay ahead of the perk in the Asian market. Mobile banking technology has become a booming business in countries, such as Kenya, where commercial banks, such as Kenya Commercial Bank, Equity Bank, Cooperative Bank and Family Bank among other banks have adopted mobile banking technology as a way of making it easy for customers to access banking services at the comfort of their homes using their mobile gadgets. As such, ANZ can borrow a leaf from these Kenyan banks and introduce the concept in Asian market to promote its growth and success. Promotion Promotion is important for the success of a company as it helps in creating brand awareness for the targeted customers. As for ANZ, the bank should consider promoting its brand across Asia through social media. Currently, more than 80% of people in Asia have a social media account, such as Facebook, Twitter, Instagram, LinkedIn and WhatsApp among others. As such, using this communication tool will enable it reach out to a wide audience, thus helping create brand awareness and market the banking products. Second, the company will have to consider promoting the bank through its website considering that the majority of Asians now have access to the internet, which they use as a source of information. Additionally, ANZ will have to consider using other communication channels, such as television, billboards, sales promotion and sponsorship to market its brand in Asia. Conclusion Asia has been a lucrative market for Australia and New Zealand Banking Group for many years now because of the growth that the region has been experiencing over the last few decades. However, considering the changing nature of the banking industry, ANZ must consider reviewing its marketing strategy to ensure success in the next five years. In particular, ANZ should consider enhancing the quality of its products and services, introduce new product offerings that Asian financial service consumers need, offer products such as loans at reduced interest rates, introduce mobile banking and invest more in promotion. This way, the bank will not only attract a large number of customers to the bank, but also build a lasting relationship with them. References ANZ 2015, Products and services, viewed 14 September 2016 http://www.anz.com/corporate/products-services/ Chung, J., Tio, A., & Anthony, S. D 2016, Disruption ahead: Financial services in Asia, viewed 14 September 2016 http://www.innosight.com/innovation-resources/disruption-ahead-financial-services-in-asia.cfm Conseguera, D. M., Molina, A., & Esteban, A 2006, “The customers' perspective on relational benefits in banking activities,” Journal of Financial Services Marketing, Vol. 10, No. 4, pp. 98–108. Deloitte 2012, Growth opportunities for financial services in emerging markets. New Global Research Series, pp. 1-8. Euromoney 2014, Banking: Asia-Pacific’s regulation headache, viewed 14 September 2016 http://www.euromoney.com/Article/3395683/Banking-Asia-Pacifics-regulation-headache.html Harrison, C 2010, Asia’s unfolding markets: Financial services firms vie for stronghold in emerging economies, viewed 14 September 2016 http://www.csc.com/cscworld/publications/52545/52550-asia_s_unfolding_markets_financial_services_firms_vie_for_stronghold_in_emerging_economies Letts, S 2016, ANZ first half profit slumps 22 per cent, bank cuts dividend by 7 per cent, viewed 14 September 2016 http://www.abc.net.au/news/2016-05-03/anz-first-half-profit-slumps-22-per-cent/7378598 Lin, E., Turner, G., Tanner, S., Stratton, O., Yi, S., & Yamamoto, S 2006, The new growth challenge in Asian financial services. Brain & Company, Inc., London. Strait Times 2016, Singapore's financial services sector resilient amid new challenges, viewed 14 September 2016 http://www.straitstimes.com/business/banking/picture-of-resilience-amid-new-challenges Walsh, J. P 2014, “The future of Asian finance,” Finance & Development, Vol. 51, No. 2, pp. 1-10. Read More