Innovative Go-To-Market strategies for Financial Product Innovations

INNOVATIVE GO-TO-MARKET STRATEGIES TO DRIVE FOR FINANCIAL PRODUCT INNOVATIONSCase Study, Concepts, and Debatable Ideas

Kenny OngTakaful IKHLAS Sdn Bhd

Branding today…

13th April 2009

•Two Domino’s employees

•YouTube

•Apology from Domino’s after 48 hours

•1 million hits

•Twitter: questions on silence

•LinkedIn: suggestions by users in forum

BusinessWeek, May 4, 2009

• Shareholder : MNRB Holdings Berhad (100%)

• Established Date : 18 September 2002

• Operational since : 2 July 2003

• Takaful Model : Al-Wakalah

• Business Portfolio : General and Family Takaful

• Number Products : More than 90

• Number of Participants : More than 1,800,000

• Number of Agents : More than 6,000

• Number of Staff : 490

• Regional Offices : 11

• Paid Up Capital : RM295 million

TAKAFUL IKHLAS CORPORATE PROFILE

Referral

Employees

Specialist& Hospitals

Panel GP Clinics

EMPLOYEES & DEPENDANT• Claims Submission• Tracking of eligibility• Enquiries & Complaints • Employee benefit materials• Unions• Abuse of benefits

PANEL CLINICS•Processing Bills•Payment •Appointment and removal•Policies & Procedures•Tracking Entitlements •Issues & Complaints•Overcharging & Abuse •MC Verification

SPECIALIST & HOSPITALS•Issuance of GL•Hosp. Bank Guarantee/Deposit•Appointment and removal •Tracking Entitlements•Processing Bills•Payment •Hospital Reports

CLIENT

IKHLAS

EASY ACCESS TO CARE•Panel of 2000 clinics

nationwide•All major hospitals recognises

our GLs•Appointment & management of

medical panel

1st CLASS SERVICE•Benefit & Procedure briefing

•Help Desk•Tri-annual Cost & Utilization

Report•Benchmarking

•Analysis & Recommendations

PEACE OF MIND•24/7 LOG Issuance •Cashless Admission

•Comments

IKHLAS Medical/Health Solution

"The digital watch didn't come from established watch companies, the calculator

didn't come from slide rule or adding machine companies, video games didn't come from board-game manufacturers Parker Bros or Mattel, the ballpoint pen didn't come from

fountain pen manufacturers, and Google didn't come from the Yellow Pages"

Bob Seidensticker, Futurehype

What’s wrong with Strategic Planning Today?

Long-term Plans

Objectives

Strategies

Enablers

Resources

Also known as L.O.S.E.R.

What’s wrong with Strategic Planning Today?

1. Biggest Threats often come from OUTSIDE your normal industry

2. Planning from the base of an ‘Existing’ organization vs. zero-based

3. Traditional Analysis (e.g. SWOT) based only on known or existing assumptions or knowledge

4. Spending too much time in market research and analysis

5. Defining the company from a Product/Service perspective vs. Category vs. JTBD (e.g. Coca-cola)

6. Wrong Benchmark – already successful vs. what made them successful

7. Implementing BSC and PMS to improve Business Model and Strategy

8. New strategy, same people

Finance Today…

$19.90

Financial Product Innovation from Non-Traditional Financial Players

• M&A: bar code readers, inventory tracking, location-based deals

• App: loyalty card, coupon, NFC, mobile payment at restaurants and cafés

• eWallet (soon)

• eWallet – in collaboration with Citibank, MasterCard, Sprint Nexus 4G

• Raised $32,000,000 - $10 at a time, via TEXT for the Haiti earthquake 2010

• the largest holder of personal savings in the world: $2.1 trillion of assets in yū-cho savings accounts, $1.2 trillion of assets in kampo life insurance services, ¥140 trillion of government bonds.

Guess Who?

Contents

1. Holistic Brand Experience

2. Value Proposition

3. Brand Co-Creation

4. Product Launch

Branding

And what this means to businesses today

The real goal of Marketing and Branding

Understanding our role in the whole scheme of things

What is the purpose of Marketing & Branding?

Ultimate Objective of Marketing: “Get more people, to buy more things, more frequently, at higher prices.”

Sergio Zyman

“Retention and Loyalty are useless if No Conversion is happening.”

“Communication is useless if No Conversion is happening.”

What is the Objective?

1.Comm = Relationship (something like Dating)

2.Comm ≠ Media glitz 3.Comm ≠ ATL/BTL/BwTL/ArTL/FTL4.Comm ≠ CSR5.Comm = Get more people, to buy

more, more frequently, at higher prices

Innovating and Branding the Business Model

The biggest and most holistic consideration

The McPlaybook*

Make it easy to eat• 50% drive-thru• Meals held in one

Make it easy to prepare• High Turnover• Tasks simple to learn

& repeat

Make it quick• “Fast Food”• Tests new products

for Cooking Times

Make what customers want• Prowls market for new

products• Monitored field tests

*Adapted from: Businessweek , Februrary 5th 2007

Retail Adaptation: McDonald’s Menu

Product Variation:– 80% Global, 20% Local– home-style meals (Boston Market) – burritos (Chipotle)

– coffee (McCafé) – DVD rentals (Redbox) – Premium menu items (snack wraps, sweet tea

Frappes)

Retail Adaptation: McDonald’s Design

$2.4 billion to: •redo at least 400 domestic outposts, •refurbish 1,600 restaurants abroad, and •build another 1,000

What is the Business Model?

Market Discipline

Cash-Flow Model

•Google

•Tata Nano

Business Model: UVP

Unique Value Proposition (USP)

Targeted Customer

Core Buying Purpose/ Customer Value Proposition/ Job To Be Done (JBTD)

Business Model: UVP

“The Product is Not the Product”

• What is the customer really buying?

• What is the “Core Buying Purpose”?

Business Model: UVP

1. Insufficient WEALTH

2. Insufficient ACCESS

3. Insufficient SKILL

4. Insufficient TIME

Business Model: Cash-Flow Model

Revenue

MarginCash Flow

Assets

Business Model: Cash-Flow Model

Cash-Flow Model Examples:1. Gillette Shaver2. IBM and Lenovo3. GM and GM Finance4. Google and Ad Revenue5. McD and Drive-thru revenue 6. SaaS PAYU e.g. Siebel/Salesforce7. Facebook and Investors8. Courts and Instalments9. Kindle Fire and e-Books10.Celcom and MVNOs11.Kenya and M-Pesa12.Banks and Non-Fees vs. Fees

Revenue

MarginCash Flow

Assets

Revenue

MarginCash Flow

Assets

What is the Business Model?

Market Discipline

Cash-Flow Model

Market Discipline

"They are the most innovative"

"Constantly renewing and creative"

"Always on the leading edge"

"A great deal!"

Excellent/attractive price

Minimal acquisition cost and hassle

Lowest overall cost of ownership

"A no-hassles firm"

Convenience and speed

Reliable product and service

"Exactly what I need"

Customized products

Personalized communications

"They're very responsive"

Preferential service and flexibility

Recommends what I need

"I'm very loyal to them"

Helps us to be a success

Product Leadership

OperationalExcellence

CustomerIntimacy

• Cost• Convenience

• TCO

• Features, Benefits

• Limited Range

• Solutions• Customization

• Breadth & Depth

Market Discipline

"They are the most innovative"

"Constantly renewing and creative"

"Always on the leading edge"

"A great deal!"

Excellent/attractive price

Minimal acquisition cost and hassle

Lowest overall cost of ownership

"A no-hassles firm"

Convenience and speed

Reliable product and service

"Exactly what I need"

Customized products

Personalized communications

"They're very responsive"

Preferential service and flexibility

Recommends what I need

"I'm very loyal to them"

Helps us to be a success

Product Leadership

OperationalExcellence

CustomerIntimacy•Air Asia

•Ramly

Operational Excellence(low cost producer)

Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995

Product Leadership(best product)

Customer Intimacy(best total solution)

Alignment & Consistency: Market Disciplines

Operational Excellence

• Competitive price

• Error free, reliable

• Fast (on demand)

• Simple

• Responsive

• Consistent information for all

• Transactional

• 'Once and Done'

• Competitive price

• Error free, reliable

• Fast (on demand)

• Simple

• Responsive

• Consistent information for all

• Transactional

• 'Once and Done'

Customer Intimacy

• Management by Fact

• Easy to do business with

• Have it your way (customization)

• Market segments of one

• Proactive, flexible

• Relationship and consultative selling

• Cross selling

Customer Intimacy

• Management by Fact

• Easy to do business with

• Have it your way (customization)

• Market segments of one

• Proactive, flexible

• Relationship and consultative selling

• Cross selling

Product Leadership

• New, state of the art products or services

• Risk takers

• Meet volatile customer needs

• Fast concept-to- counter

• Never satisfied - obsolete own and competitors' products

• Learning organization

Product Leadership

• New, state of the art products or services

• Risk takers

• Meet volatile customer needs

• Fast concept-to- counter

• Never satisfied - obsolete own and competitors' products

• Learning organization

Alignment & Consistency: Disciplines, Priorities, and KPIs

Customer Intimacy

Product Leadership

Organization, jobs,skills

Management systems

Information and systems

Culture, values,norms

Each Discipline Requires Different Priorities & Resources

•Central authority, low level of empowerment•High skills at the core of the organization

•Disciplined Teamwork•Process, product- driven•Conformance, 'one size fits all' mindset

• Integrated, low cost transaction systems•The system is the process

•Command and control•Quality management

•Central authority, low level of empowerment•High skills at the core of the organization

•Disciplined Teamwork•Process, product- driven•Conformance, 'one size fits all' mindset

• Integrated, low cost transaction systems•The system is the process

•Command and control•Quality management

Organization, jobs, skills

Management systems

Product Leadership

•Ad hoc, organic and cellular•High skills abound in loose-knit structures

•Concept, future-driven•Experimentation and 'out of the box' mindset

•Person-to-person communications systems•Technologies enabling cooperation

•Rewarding individuals' innovative capacity•Risk and exposure management•Product Life Cycle profitability

Product Leadership

•Ad hoc, organic and cellular•High skills abound in loose-knit structures

•Concept, future-driven•Experimentation and 'out of the box' mindset

•Person-to-person communications systems•Technologies enabling cooperation

•Rewarding individuals' innovative capacity•Risk and exposure management•Product Life Cycle profitability

Management systems

Customer Intimacy

•Empowerment close to point of customer contact•High skills in the field and front-line

•Customer-driven•Variation and 'have it your way' mindset

•Strong customer databases, linking internal and external information

•Strong analytical tools

•Customer equity measures like life time value•Satisfaction and share management•Focus on ‘Share of Wallet’

Customer Intimacy

•Empowerment close to point of customer contact•High skills in the field and front-line

•Customer-driven•Variation and 'have it your way' mindset

•Strong customer databases, linking internal and external information

•Strong analytical tools

•Customer equity measures like life time value•Satisfaction and share management•Focus on ‘Share of Wallet’

What does the Customer want?

* Treacy & Wiersema, The Discipline of Market Leaders, 1995

Product/Service Attributes Relationship Image

Product/Service Attributes

Quality

Selection

Smart Shopper

Relationship Image

Operational Excellence: Quality and selection in key categories with unbeatable prices

Function

Best Product

Relationship Image

Product Leadership: Unique products and services that push the standards

Service Trusted Brand

Relationship Image

Customer Intimacy: Personal service tailored to produce results for customer and build long-term relationships

Relations

Alignment & Consistency

HP well-balanced portfolio, mass customization

Acer super lean cost structure, aggressive pricing

Apple powerful products, premium

pricing, limited range

Still Doing well in

2009-2011

Alignment & Consistency: Business Model

Market Discipline

Cash-FlowModel

Branding Concept #1: The Product as a Concept

The Product is not the Product

The “Old” Days

InventR&D

Build• Manufacturin

• Product Dev.

MarketMarketing

SellSales

The “New” Days

Invent

Market

Manufacturing

Marketing

Marketing 101

Product

Promotion

Pricing

Marketing & R&D

Product

Promotion

Pricing

Features

Target

Logistics/ Technology

Marketing & R&D

FeaturesBrand

Target

Logistics/ Technology

Promotion

Product

IKEA Apple Nestle Asus

R&D Today → RD&D

• Garnier• Digi

Design Point 1: Designed to SELL

Design Point 2: Before-After R&D

R&D Today → RD&D

• Research, Development & DESIGN

1.Features

2.Benefits

3.Differentiation

R&D Today → RD&D

• Research, Development & DESIGN

1.Function

2.Aesthetics

3.LogisticsDesign Point 1: Designed to SELL

Design Point 2: Before-After R&D

Branding Concept #2: Understanding the Consumer

Go-To-Market: Different Customers, Different Methods

Self Reliant Need Help

Seek Change

Seek Stability

Searchers Collaborators

Streamliners Delegators

Seek Change

Seek Stability

•touch and feel•‘first’ to know

•Talk to technicians/experts

•pros and cons, trends, lots of info

•Offer choices•Online resource

•innovations, new stuff

Seek Change

Seek Stability

•Minimize risk•Standardization and

consistency (routines)•Wants systems to follow

their habit

Seek Change

Seek Stability

•Treats Store Personnel as consultants

•Pilot projects, process improvements

•Co-discover new applications for existing

business/products•Ongoing coaching and value-added services

Seek Change

Seek Stability

•narrow choices•Pre-package, pre-select

(default)•Make it easier to renew

than to cancel•Focus on a specialty

(niche)•Honesty, reliability, Trust

Men vs. Women: Getting Dressed

Men vs. Women

CNI: Basket Analysis

Color Psychology

remind us of something familiare.g. blue = calm

Children = Bright Primary Colors e.g. toys, clothes and children's books

Cultural Variations; white = marriage (western) = death (China). Purple = death (Brazil) Yellow = sacred (Chinese) = sadness (Greece) = jealousy (France)

Young = bold colors; older = subtle palettes.

Red , Orange = to eat quickly and leave

carpeting to influence patterns of travel

Target: Decision Chain

Influencer

Again: different type, different strategy

Customer Types vs. Messaging

Hand brake

Surviving

Well Off

Don’t Care

Customer Types

Your Products/Services

Customer Types vs. Messaging

Your Products/Services

Essentials Treats Post-ponables

Expan-dables

•Necessary•Survival

•Well-being

•Indulgences•Justifiable

•Needed or desired

•Can be put off

•Unnecessary•Unjustifiable

Customer Types vs. Messaging: Example

Hand brake

Surviving

Well Off

Don’t Care

Customer Types •Price

•Smaller Pack•Private Labels

•Low-cost ‘Value’ products•Fighter Brands

•Less Variety/Customization•Immediate cash back

Essentials

Branding Concept #3: Right Tools at the Right Time with the

Right Audience

The power of targeted branding communications

Market Penetration Overview

• “Crossing the Chasm” Resistant to taking up new product (prefer ‘safe’ route)

1. Need to attract the Early Adopter (willing to try) group first via neutral and niche products

2. The Mass market will follow once they see early adopters joining

3. If company does not innovate or has weak retention plans, customers will leave

Market Penetration Overview

The Right Tools for the Job

Reach of Communication

Personal (exp)

Personal (info)

Impersonal (info)

Individual Mass

Mass Traditional, In-home, Out-Of-Home

Mass Unconventional

Mass Online

Personal (exp)

Personal (info)

Impersonal (info)

Individual Mass

Mass Targeted Conventional

Mass Targeted Online

E.g. Annual Reports, Analyst Briefings, IR Roadshows, IR Website

Personal (exp)

Personal (info)

Impersonal (info)

Individual Mass

Individual Targeted Conventional

Individual Targeted Online

Contests

One-on-One

Personal (exp)

Personal (info)

Impersonal (info)

Individual Mass

Experiential Marketing

Geo-Marketing (LBS)

Experiential Marketing: Example

• Opened first café in midtown New York. • It serves coffee in a pleasing environment,

– comfortable lounge – read the financial newspapers– watch on plasma screens– FREE Internet

• Customers can’t perform financial transactions in the Café. – > $200 million new accounts and mortgages < 1 year

• Starbucks-like prices for coffee, tea, biscotti, and other pastries.

Location-based example

Geo-Marketing example: O2, Starbucks, L’Oreal

• Six-month trial • Placecast’s geo-

fencing technology • 1,500 areas

offering deals.• Opt-in• Gender, age and

general interests. • Receive Special

Innovation Issues & Challenges for the Financial Industry

Issues & Challenges for Innovation in Financial Sector

• Short-Term financial measures & expectations• Incremental innovation - highly commoditized industry• Heavily regulated - limiting what new products can be

offered, to who you are even allowed to communicate with

• Security - data leakage, PDPA • Protection and the management I.P. - especially due to

technology advancements• Non Financial Intermediaries (NFIs) (e.g. retailers,

telecom providers) providing financial services.

Non Financial Intermediaries (NFIs) example

Peer-to-Peer Lending

Zopa (http://uk.zopa.com/ZopaWeb/) 1. eliminating traditional

financial institutions for obtaining credit.

2. Target: self-employed, project-based or freelance workers that are not in a full time employment with irregular incomes and lifestyles

3. Can borrow smaller amounts over shorter periods and are not charged additional fees if they repay early

Non Financial Intermediaries (NFIs) example

Peer-to-Peer Lending

Lending Club (http://www.lendingclub.com/)

• Cheaper and faster than traditional consumer credit (7.88% vs. 13%)

• Proprietary assessment of customer reputations within their social networks

• Tracking and publishing the history of every Loan

• Publishes the formula risk and interest algorithm

• Default rate is low 2.7 % (vs. 5.5 % for prime credit cards)

Peer-to-Peer Lending Business Model

Revenue model

Cost model

Potential Tools for Innovation in the Financial Services sector

• Social Networks - new financial services, increase interaction with customer, collect new ideas from outside

• Dedicated “Innovation Department” or “R&D Department”• Think broadly about what their target customers are

trying to get done• New technologies – Mobile, Social, Cloud, GeoMarketing

etc.• Under-served Markets, New Segments on Value-Chain,

Micro Niche segments• Academia partnership• Corporate venture capital fund

Future of Financial Services Sector

• Just take an image of the front and back of the check. • No annoying deposit slip required• Immediate confirmation of deposit transaction.• It’s Free

• Just slide the Money Bar to transfer funds between accounts.

• Competitive processing fees and NO monthly rental

• Both the app and the reader are free

• Send email or SMS receipts to the customer

• Photo identification system for security

End Notes

Which Company?

American Customer Satisfaction Index (ACSI) • 64 out of100-point scale: lower than IRS (Tax)• 2nd last among 30 companies surveyed• Lowest 5% among 223 companies surveyed• Bottom 5% of all measured private sector

companies

• 500 million customers2010 American Customer Satisfaction Index (ACSI)

E-Business Report

Which Company?

American Customer Satisfaction Index (ACSI) • 64 out of100-point scale: lower than IRS (Tax)• 2nd last among 30 companies surveyed• Lowest 5% among 223 companies surveyed• Bottom 5% of all measured private sector

companies

• 500 million customers

2010 American Customer Satisfaction Index (ACSI) E-Business Report

Popularly Unpopular

Popularity

Affection

Biggest Issue in Financial Product Innovation?

“With great power comes great responsibility”

Uncle Ben, Spiderman 3

Ultimate Objective of Marketing: “Get more people, to buy more things, more frequently, at higher prices.”

Sergio Zyman

Thank You.

soft copy of slides: http://totallyunrelatedrandomanddebatable.

blogspot.com/

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