BANK MARKETING STRATEGIES1. Menjelaskan tentang objektif dan matlamat strategi pemasaran bank. (To explain about the banks maketing objective and strategy)Membincangkan perancangan strategi pemasaran di peringkat perancangan korporat di bank-bank. ( To discuss about the marketing strategic planning at corporate level in banks)

INTRODUCTIONSTRATEGY- to the banking people , the term strategy refer to the type of decision made by top executives and members of banks board of directors concerning the relationship between the bank organisation as a whole and its environment . ( Decision by top people about r/ship between the bank and its environment)

In other words, strategy describes those critical boundary spanning decisions that (define the framework and direction) for overall bank marketing organisation and management, providing answers to questions such as;1. In what specific business should the bank be, in terms of mix of services @ products offered and customers served?

2. What course of action should the organization pursue , in terms of emphasis, timing, priorities?3.How should the bank resources be acquired and how should these resources be deployed (dibahagikan/digunakan) for more efficient marketing operations?4.What major market opportunities are most compatible with banks top management defination of marketing goals, objectives and missions etc?

The development of a marketing strategy for a bank must fit in with that banks overall objectives. Therefore , marketing strategy should be an integral part of a corporate or strategic plan. (The relationship between mktg strategy and corporate planning)

CORPORATE PLANNINGCorporate planning may be defined as The planning of the total resources of a company for the achievement of quantified objectives within a specific period of time.Hence, corporate planning has been developed to meet the management need to take an objective overall view of the total bank operations, and alsoto ensure that the criteria for success are being fulfilled.

Corporate planning involves making careful considered decisions before taking action.

3 basic components of Corporate Planning1.Economic missionFormulating the kind of business the banking organization should be in and what its performance objectives should be.

2. Competitive StrategyTo find the right services market-sales approach combination for effective accomplishment (pencapaian) of the economic mission.

3. Programme of ActionInvolves a search for efficient means of implementing the competitive strategy, that is, developing effective marketing mixes to implement the competitive strategy decided.

Planning is one of the first and most important functions of marketing.Planning is required in marketing to answer the following questions:What types of customers does the bank want?In what direction is the bank going?How many new employees will be required for servicing new branches, new services, new customers?.d) What will be the most profitable products, services, branches,csutomers, activities, markets, etc?

Planning will help the bank to create and anticipate rather than follow the more common banking practice

In other words, simply reacting to competitor moves and to customers expected needs.

WHY PLANNING?

1.ESSENTIAL IN THE CURRENT ECONOMIC CONDITIONSthe banks can realistically consider their use of resources.

2.EFFICIENT CORPORATE PLAN IS AN IMPORTANT TOOL FOR DECISIONMAKING THROUGHOUT THE WHOLE BANKING ORGANIZATION

TWO ORGANISATIONAL APPROACHESBOTTOM UP

TOP DOWN

1.BOTTOM UPStrategy formulation becomes very difficult

2. TOP DOWNLack of realism in the plans and a lack of commitment to the plans by the employees in that bank.

STAGES IN STRATEGIC PLANNING1Before plans are made, a time horizon has to be fixed (fixed time horizon)5 years for long term (strategic plan)1 year for short-term.

Bottom upPlanning can be done individually by the different departments and then submitted to the planning department. So that the individual plans can be integrated to form a corporate plan.

Top DownMore realistic approach!!!The corporate plans will evolve round the main areas in which business effort will be concentrated over the span of the time horizon, and this is decided by the board and communicated to the planning department.

A strategic plan of a bank will generally include:

A description of the objectives to be achieved (Each branch have to increase deposit RM 5 M p/month next year)A description of the resources allocated to achieve various purposes (how many sales people are required to achieve the objective)Background information essential to the planning process ( ie. Information about customers, the deposit market)Any assumptions that have been made

e) Plans for marketing in all aspects of , by services and the launch of new services, promotional material, press and public relations, pricing if appropriate , research, advertising, training, branch development, local strategies, special audits or projects;f) Agreed dates for starts and completions , standards of performance and means of reporting and reviewing progress ( must have the start date and completion date)g) Agreed budgets of expenditure and methods of control

When the long range plans are settled , the more specific short-term plans can be drawn up.The setting of short term objectives aims at:a) Making sure that the policies of the bank organisation are followed through at lower levels;b) Making sure that the managers efforts are directed at business the banks wants and not at business that is not included in the corporate plan;

c) Obtaining a consistent minimum perfomance from all branch managers and measuring this perfomance;d) Giving the whole bank organization a sense of purpose.

THE RELATIONSHIP BETWEEN STRATEGY AND MARKETING PLANSThe marketing plan derives from the corporate plan. (marketing plan is considered a part from corporate plan)It should be flexible and regularly reviewed and should allow for continuous control , good communication to staff and regular evaluation.It involves substantial research work and the use of information from the branch network about pricing policy, advertising and promotion, public relation and the use of resources in support.

For e.g : Training and development of services.

FORMULATING A MARKETING STRATEGYPLANNING-calls for the establishment of objectives and formulation of strategies.OBJECTIVES-indicate what the bank hopes to accomplish , strategies follow and attempt to suggest how the bank will reach the objectives

According to Kotler- Marketing strategy is a set of alternative , policies and rules that guides over time the firms marketing effort-its level, mix and allocation partly independent and partly response to changing environmental and competitive conditions.

3 Majors Stages In formulating A Marketing StrategyIdentification of the target market(s) and their needs , and the formulation of marketing objectives.Defining constraints on achieving objectives.Allocation of marketing resources via marketing mix.

IDENTIFICATION OF THE TARGET MARKETING AND FORMULATING THE MARKETING OBJECTIVESE.G: Possible target markets:Private, industrial, comercial, government/public and international customers.OBJECTIVES: Profit; growth;market share;spreading risk;diversification of services.

2) DEFINING CONSTRAINTSEconomic, political, social.Government; legal and technological developments.Competitive situation from other banks .

3) ALLOCATION OF MARKETING RESOURCESVIA MARKETING MIX:Services (products /services development and differentiation).Price (price policies for various services the bank offers)Promotion (advertising, publicity etc)Place (distribution, coverage, location)

TYPES OF MARKETING STRATEGIES FOR BANKSThere are 3 broad categories of bank marketing strategies:1) Defensive2) Offensive3) Rationalisation

1.OFFENSIVE STRATEGIESOffensive strategies attempt to penetrate new areas, expand geographically, search for market opportunities and adopt innovations in order to make the bank organisation a leader in its market. (eg: Maybank )

5 main offensive strategies:Geographical expansionMarket penetration (penetrate the market with current products)New marketMarket leaderMarket challenger strategies.Explaination-check from the text book assignment..!

2.DEFENSIVE STRATEGIESDefensive marketing strategies goal is to protect existing customers and maintain the present market share..!.There are 2 defensive strategies:a)Market FollowerAdopting a market follower strategy means that a bank has accepted the status quo. It will not challenge the market leader (s) but will attempt to maintain its market share by a strategy aimed at retaining customers and winning a share of new ones. (eg: BCB, RHB, Affin)

This strategy may be carried out by exploiting a set of target markets to which it can bring a distinct (jelas, nyata, berlainan) advantage, perhaps in terms of location or specialist services offered.In general, market followers possess strong management who give priority to profitability, rather than market share.

b) Market-Nicher StrategyA strategy aims to take advantage of the niches (ceruk/ruang yg kecil) that exist in the market. This is done through specialisation.The markets here are relatively small and tend to be beyond the interests of large banks (bank2 bersaiz besar kurang memberi tumpuan kpd segmen/kws ini).To the smaller banks, however, the niche is safe and profitable..!. The smaller banks may adopt market-nicher strategies to avoid clashing with the major banks.These banks will attempt to find and occupy (take advantage) this market niches that may be either overlooked or ignored by the bigger banks.

3. RATIONALISATION STRATEGYCost Reduction Strategy via:1) Delete Expensive or High cost-profit ratio services and branches. (reduce o/time, electricity, photostat, recycle paper, telephone call/fax, training & etc)2) Improve performance of service / in branches via cost-saving techniques.eg: offer internet banking, introduce self service machine, services through phone (phone banking) , sms, numbering systems, service outlet & etc)

Bank strategies will depend (influence) on:Banks competitive size and position in the market segment (bank yg bersaiz besar mempyi lebih byk strategi compared bank yg bersaiz kecil).Company resources, objectives and policies; (BSN @ Bank Islam mpyi polisi yg berbeza & matlamat yg berbeza-more towards social obligation)Competitors marketing strategies; Each bank have their own mktg strategies, normally bank will compare their strategy with their main competitor strategy, sometimes they may follow/adjust/modified competitor strategy.

Target markets buying behaviour;(different market, different strategy applied)-retired people more on saving, so we can offer to FD @ Saving a/c! /children/adult life insurance, credit card/education loan).Hawkers/penjaja2kecil -SME loan The stage of the product life cycle Introduction & growing stage-stress on promotion/advertisement, maturity bank customer relation/sales after services, declining stage R & D, or offer new products @ services.

The stage of the economyDuring economy recession/gawat-reduce loan, focuss more on collection & credit control. Loan on share financing close for a while. During economy boom, bank will focus more on property loan/industrial loan.