Competition in the Australian Banking Industry - Case Study Example

Services marketing Student’s Name: Instructor’s Name: Course Code & Name: Date of Submission Services marketing Organization overview Westpac has a long history in the Australian banking sector, being the first and the oldest bank in the country. This bank was established in 1817 as the Bank of New South Wales and eventually changed its name to Westpac Banking Corporation in 1982 following the acquisition of the Commercial bank of Australia (Westpac website, 2012). 2002 saw the bank advent some strategic reshaping which was characterized by the sale of its long-term finance company, Australian Guarantee Corporation Limited (AGC) to GE Australia. Westpac merged with St George Bank Limited in 2008, a key strategy that culminated in the formation of a bigger multi-brand group with a diversified portfolio (Westpac website, 2012). The Bank has continued with its upward trend in terms of growth and elevated consumer base and despite the economic recession in 2008, Westpac has sustained a constant market share both in the Australian population and internationally. By 2017, Westpac will reach a commendable milestone of being in business for two centuries and according to Westpac Group Annual report (2010), the firm is making efforts towards sustainability which entails managing and positioning the company for the long-term. This firm is an interesting case study for analysis based on its exemplary strategic approach towards increased market share amid immense competition in the Australian Banking industry. This has even prompted trends towards internationalization. In addition, the bank portrayed outstanding response to the recent economic slump. Analysis of current service offering The SWOT model will be put into utility in this analysis. SWOT analysis can be perceived as the process through which decision makers in any given firm gradually develop their awareness of the organizational environments with the sole goal of influencing the performance in the present and in the future ( (Naryanan & Nath,1993). Al-Rousan and Qawasme (2009) determined that an explicit relationship exists between dimensions of competitive advantage and SWOT (Strength, Weakness, Opportunity and Threat) analysis. Westpac banking Corporation is endowed by diverse strengths and weaknesses as well as opportunity and threat. The prior category is chiefly internal to the firm while the latter category is connected to the external environment. In regard to strengths, is that the firm has an already established market share and has a robust reputation of high quality services among its consumers.In addition, the firm is endowed with concrete financial, information and human capital. Nonetheless, the firm is confronted by a major weakness whereby the public perception of heightened interest rates is bound to have detrimental impacts on the consumer base and affect the service delivery process. However, this corporation is endowed with diverse opportunities due to internationalization, mostly in the regions which have high unbanked population. On the other hand, this corporation is under constant threat of competition from other banks offering similar services. In light of the above phenomenon, this corporation is confronted by an urgent necessity to expand its portfolio in order to cater for the dynamic consumer demands in the market. This will necessitate increased investment in innovation and competent human capital to spearhead these efforts which will culminate in the maintenance of a favorable niche in the market. This bank is highly credited for its responsiveness to consumer issues. According to Naik, Gantasala and Prabhakar (2010), responsiveness is the willingness to assist customers and provide prompt service.Westpac has continued to engage diverse efforts aimed at understanding and addressing the consumers’ concerns through the provision of services that are tailored towards addressing their specific needs. This is directly linked to the need to understanding the consumer needs and seeking the most ideal ways to solve them. The imperative role played by this approach is supported by Kaynak and Kucukemiroglu (1992) who suggested that to successfully compete in the contemporary dynamic and competitive marketplace, banks ought to engage intensive focus in understanding the needs, satisfaction, attitude and behavior patterns of the market. Nonetheless, the group is yet to achieve its women in leadership targets as a way of responding to the consumer demands of elevated gender equity in the bank. This will necessitate embracing more gender sensitivity in the future if at all this group is to achieve its gender equality targets as well as compliance to national legislations on gender ratio in workplaces. Service scape of the corporation The corporation has in the recent past formulated and implemented prudent policies aimed at bailing out the consumers in in the occurrence of particular crisis. This is best epitomized by response of Westpac to the gas crisis in Western Australia in 2008 whereby the corporation announced a special relieve package to assist the consumers who were seriously affected by this crisis in this particular region. This entailed the opportunity for the consumers to defer repayment of home loans for up to three months as well as waivered interest penalties on consumers who wished to withdraw term deposits among other relief packages (Westpac, 2008). Nonetheless, the corporation needs to elevate the accessibility of its services by the marginalized market segments. This is based on the fact that the segregation of the Aboriginal populations has been an ongoing argument among policy makers and in the public domain. There is presumed segregation in service delivery and Westpac group is yet to address this maze. Process analysis This analysis will center on the value chain developed by Porter (1985). Stabell and Fjeldstad (1998) determined that Porter’s value chain is presently the accepted language for both representing and analyzing the logic of firm-level value creation. This is based on the fact that Porter (1985, 1990) determined that the overall value creating logic of the value chain with its generic categories of activities is valid in all industries. Inbound logistics: Stabell and Fjeldstad (1998) perceived these as activities associated with receiving, storing and disseminating inputs to the product. At Westpac, this entails getting service priorities from the consumers as well as robust market analysis. Operations:According to Stabell and Fjeldstad (1998), these are activities which are associated with the transformation of the inputs into the final product. The consumers’ feedback is acted upon which culminates in production of consumers’ tailored services. Outbound logistics: This entails the distribution of the final products to the consumers, for instance, mortgage loans and more advanced ATM cards among others. Marketing and sales: These are activities associated with the provision of a means through which the buyers can purchase the product and prompting them to do so. This entails promotions, advertisements and discounts to consumers. Services: These are activities associated with the provision of services which will improve or maintain the value of the products. At Westpac, an efficient feedback mechanism ensures that the services are periodically reviewed in response to consumer needs. Marketing communication strategies analysis In regard to consumers, this entails issues related to advertisements which results in dissemination of information in relation to available services. On the other hand, the shareholders are regularly updated on the current operations through monthly and annual reports. However, the corporation needs to enhance its information dissemination channels in response to the contemporary technological advancements, for instance, embrace more of online advertisements as opposed to the print media. This will be fundamental in ensuring that the information reaches a wider market share in diverse market segments. Pricing strategies analysis There are three basic pricing strategies that have been fundamentally utilized by Westpac. These are cost-based pricing, consumer-based pricing and competitor-based pricing. However, it is worth noting that this corporation has gradually shifted from cost-based pricing to the more relevant consumer-based pricing. This is founded on the presumption by Gale and Swire (2006) who determined that in the contemporary world, many companies have embraced a paradigm shift from cost-based pricing to consumer-perceived value analysis. Consumers based pricing is founded on the tenet where the prices for the services are determined by what a firm believes consumers will be willing to pay. This is based on the fact that consumers have differences in their cost to serve (Shin, Sudhir & Yoon, 2010), consumers want good products and no consumer wants to overpay on a product. Under consumer based pricing, the corporation has chiefly concentrated on penetration pricing and price skimming. The corporation needs to embrace a more profound pricing strategy while considering its diverse consumer base, most notably with the advent of internationalization. In this regard, the prices are bound to reflect the financial capacity of the consumers, age, and the overall occupations of the consumers. This will be key in ensuring that the consumers get the most relevant services at the most ideal price which will culminate in maintained market share and competitive advantage. Monitoring and Evaluation analysis The corporation has in the past embraced diverse M&E mechanisms aimed at collecting and analyzing information about the services and their eventual impacts in meeting the consumers’ needs. This is most fundamental when a new service has been launched in the market and thus imperative in informing the corporation on whether or not it is in the right track towards achieving the set objectives and goals and whether the services have eventually achieved or contributed to the desired impact. This organization ought to monitor its management and service delivery practices through periodic market surveys as well as evaluation of the impacts of the services after their instigation in the market. This is more applicable in the future whereby the market dynamics are bound to alter the consumer preferences. Conclusion and Recommendations In regard to technology, the firm ought to formulate a strategic approach in rolling out its technologically-oriented services. This will be fundamental in delivering of services which will cater for all the consumer classes in the market regardless of age, gender and financial set-up.Secondly, the marketing strategies of Westpac ought to expand outside the confines of the Asia pacific region and diversify to other areas in the world which will not only elevate its consumer base but also enhance its global corporate image.Thirdly, the firm ought to fast-track the implementation of some of the already formulated policies like gender equity. This will be integral in increasing its acceptance among diverse consumers as well as compliance with the set standards of gender balance in the corporate world. All these are imperative in not only in enhancing the overall image of the corporation but also in improving the international market share of this corporation. References Al-Rousan, M. & Qawasme, F (2009). The Impact of SWOT Analysis on Achieving a Competitive Advantage: Evidence from Jordanian Banking Industry, International Bulletin of Business Administration, 243 (6), 82-92. Gale, B. & Swire, D. (2006). Value-Based Marketing & Pricing. Boston: Customer Value, Inc. Kaynak, E., &Kucukemiroglu, O. (1992). Bank and Product Selection: Hong Kong. The International Journal of Bank Marketing, 10(1), 3-17. Naik, C.N., Gantasala, S.B. &Prabhakar, G.V. (2010). Service Quality (Servqual) and its Effect on Customer Satisfaction in Retailing. European Journal of Social Sciences, 16(2), 231-243. Narayanan, V., & Nath, R. (1993). Organization Theory: Strategic Approach. USA: Irwin INC. Porter, M., (1985). Competitive Strategy: Techniquesfor Analyzing Industries and Competitors. New York: FreePress. Porter, M., (1990). The Competitive Advantage ofNations. New York: Free Press. Shin, J., Sudhir, K. & Yoon, D., 2010, ‘When to ‘Fire’ Customers? Consumer Cost Based Pricing. Retrieved May 27, 2012 fromhttp://mba.yale.edu/faculty/pdf/ShinJ_WhenToFireCustomers.pdf. Stabell CB, & Fjeldstad, OD. (1998). Configuring Value for Competitive Advantage: On Chains, Shops, and Networks, Strategic Management Journal, 19, 413-437. Westpac, (2008). Westpac Responds to gas Crisis in WA. Retrieved May 27, 2012 from http://www.westpac.com.au/about-westpac/media/media-releases/2008/19june2008/ Westpac Group (2010). Annual Review and Sustainability Report: Sustainability Matters. Sydney: Westpac Group. Westpac website (2012). Retrieved May 27, 2012 from http://www.westpac.com.au. Read More