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RETAIL BANKINGACADEMY

304.Brand Management

Course Code 304 - Brand Management

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67© Retail Banking Academy, 2014


Course Code 304Brand Management

Introduction

It is often maintained that financial products and services can be copied by competitors, but a retail bank’s brand* is unique. Indeed, Berry (2000)† claims that branding is “the cornerstone of services marketing for the twenty-first century”. This states that while prices, products and processes may be duplicated by competitors, the differentiated skill of the bank’s employees is not easy to imitate. Hence, it is reasonable to conclude that it is the uniqueness of the bank’s people that helps create a unique bank brand.‡

Two immediate questions emerge. They are:

What is a bank brand?

and

What creates its unique value for the bank?

First, we outline some definitions central to understanding the concepts and principles that are relevant for bank brand management.

Definition of a Brand

The definition of a brand is not without ambiguity. In the early years, the American Marketing Association (AMA) defined a brand as “a name, term, sign, symbol or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of the competitors”.§ The later 1995 definition by the AMA added the phrase ‘any other feature’ to reflect attributes of differentiation. There is some consensus by

* It is surmised that the word ‘brand’ is derived from the Scandinavian word ‘brandr’, which literally means ‘burn’, referring to the practice of branding livestock to indicate ownership. It is also similar to the Dutch word ‘brand’ that means ‘fire’, synonymous with ‘burn’† Berry, LL, ‘Cultivating service brand equity’, Journal of the Academy of Marketing Science, Vol 28 No1, pp 128-137 (2000)‡ This key point is explored further in this module under the title of ‘Employee branding’§ This 1960s definition is cited in Wood, L, ‘Brands and brand equity: definition and management,’ Management Decision, 38 (9), 662-69 (2000)


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marketing experts that the definition of brand is difficult to pin down.*

Notwithstanding the semantic problem, we take the view proposed by Feldwick† that a brand is “simply a collection of perceptions in the mind of the consumer”. This consumer perspective is quite interesting and is relevant to the Kaminsky philosophy, which is the guiding paradigm of the Retail Banking Academy (RBA). Indeed, the view of a customer-derived value of a brand is reflected in the following excerpt from a presentation at the Top Management Forum on Corporate Brand Management, at the Asia Productivity Organisation in 2007:

“The source of brand power lies in the association of a brand with the memories, experiences, and knowledge of consumers and other related stakeholders. In the case of a product or service, the source of its brand power lies in the memory that, for example, it was easy to use, we were satisfied with its quality, others praised it, we are proud of it, we feel attached to it, the service was excellent, sales clerks gave a good impression, and so forth. In other words, a company’s success in satisfying customers’ value becomes the source of its brand power. The power of a brand brings to a company a competitive edge in marketing, expansion of profit margins, expansion of market share, and increased influence on the distribution network. At the same time, it benefits customers by making it easier for them to choose the products, giving them confidence in making purchasing decisions, and bringing a sense of satisfaction in using the company’s products.”

Source: Yoshiko Shibasaka, Manager, Intellectual Property Services Office, KPMG AZSA & Co.

It is noteworthy that the customer-centric view is not consistent with the corporate brand as a separable asset, but rather is determined by the company’s people, and enabled by innovative products, efficient processes and other tangible elements, such as a modern bank branch or an attractive website. The bank brand is unique because it is enhanced by unique people skills and expertise in the bank. This link is not separable and hence the bank brand is not a separable asset in an accounting sense.

Brand Equity and Brand Value

There are two other important concepts associated with a brand. These are brand equity and brand value. Returning to Feldwick (2002), where the brand is defined in terms of consumer perceptions, it is logical to conclude that a bank’s brand equity resides with the customer. Brand equity is what the product or service is worth to the customer. It is based on customer preferences, perceptions and knowledge of the product.

Brand equity is the value a brand adds to a product (Farquhar 1989, 24-33).‡ It may be labeled ‘customer-based brand equity’ (CBBE) that summarises the customer response to a brand name. We will explore the CBBE model as developed by Keller (1993)§ and modified by Aaker (1991)¶ in this chapter. Brand value is an asset value that is of interest to management and other stakeholders. It is defined as the net present value of expected future cash flows of a branded product compared to a similar product that is not branded. It is not uncommon in retail stores to find well-known products next to similar products with ‘no-name’ brands. Such a situation affords us an opportunity to calculate the differential net present value of future cash flows and hence the value of a brand.

* See, ‘The Problems of Brand Definition’ by Mark Avis, University of Otago, Feldwick, P (2002)† Feldwick, P (2002), ‘What is brand equity anyway, and how do you measure it?’ (Norwich, UK: World Advertising Research Centre)‡ Farquhar, Peter H (1989) ‘Managing brand equity’. Marketing Research 1(3):24-33§ Keller KL (1993) ‘Conceptualising, measuring, and managing customer-based brand equity’. Journal of Marketing 57(1): 1-22¶ Aaker DA, ‘Managing Brand Equity’. (New York: The Free Press, 1991)


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Important Point

A bank’s brand equity resides with customers. It is the value of what the product or service is worth to the customer. As stated by Keller (1991), “the power of a brand lies in the minds of customers.” (p15)

We reiterate a key point: a bank brand has a direct and positive correlation with effective sales management. Later in this module, we present evidence to conclude that new customers will form a mental image of the bank’s brand before they seek to forge a relationship with the bank’s frontline staff.

Customer experience in dealing with bank staff will be a major determinant of willingness to enter into a more robust, long-term relationship with the bank. The quality of the relationship with bank staff will affect the customer’s future brand perception. In other words, brand perception is dynamic.

Lesson

Unlike companies that produce tangible products - where a strong brand is the main driver of sales - in financial services, the bank must try to create a strong brand in the customer’s mind. Customer experience with the brand matters.

The Role of Brand Management in Achieving Profitable Growth

The seminal research by the acclaimed brand expert Scott Davis is contained in his book Brand Asset Management: Driving profitable growth through your brands (Jossey-Bass, USA, 2000). A central idea of his work is that key to successful brand management is the involvement of the bank’s leadership. His recommended approach is based on the following growth diagnosis during the process of development of the bank’s business strategy. Davis recommends that leadership focus on two questions:

Question 1: (Focus on a 3-year growth gap)

What is the forecasted gap between current annual revenue and the bank’s annual revenue target in three years?

Question 2: (Investment in brand)

What investment to enhance brand meaning will be made to close the forecasted revenue gap?

The main idea embodied in these two questions is that brand meaning to consumers is the principal conduit which links the bank’s core competencies to achieving profitable growth.

The old adage is worth noting: a bank’s brand is what the bank stands for in the eyes of customers: it is the driver of customer traffic. We end this introduction with some data on the position of bank brands globally, as reported by Brand Finance©.

Leading Bank Brands

The following information on leading bank brands in 2012 is provided by Brand Finance©. The methodology is based on an estimate of the brand value of the banks, based on a net present value (NPV).* Wells Fargo, a US retail bank, is rated the leading global retail bank in terms of brand value.

* The methodology employed by Brand Finance© is described on its website. 1. Determine forecast revenues 2. Assess the Brand Strength 3. Establish Royalty Rate 4. Determine the Discount Rate 5. Brand Valuation Calculation - The NPV of post-tax royalties equals the brand value


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Wells Fargo heads retail banking recovery to become the world’s most valuable bank brand

• Wells Fargo is the world’s most valuable bank brand with a value of $26 billion

• There has been a 15 percent increase in total brand values from $746.8 billion in 2012 to $860.7 billion in 2013, in contrast to a loss of more than $100 billion the previous year

• Despite murmurings of reduced growth, Chinese banks have performed well once again, with a total brand value increase of 335 percent

• UK banks, including a former winner of the most valuable bank brand, HSBC, have done poorly. The UK is the only top-10 country to see the total value of its bank brands fall (by two percent)

Source: Brand Finance© Banking 500 (31 January 2013)

Open Question #1

a) What is the main difference between brand value and brand equity?

b) “Wells Fargo heads retail banking recovery to become the world’s most valuable bank brand.”

Does this mean that the bank has the brand most trusted by consumers?

Be specific in your answer.

For the remainder of this module, we focus on services brand management, which of course is most relevant for retail banking. However, it is worth stating that brand management in service industries such as in retail banking is a complex undertaking. This view is echoed by Mosley (2007)* who stated:

“The ultimate aim of brand management has always been to deliver a consistent and distinctive customer experience, but this task has been particularly difficult for service brands due to the greater complexity involved in managing service brand experience. Despite the evidence that personal interactions are generally more important in driving customer service satisfaction, there has been a tendency for service companies to focus more of their attention on the functional/operational factors involved in service delivery.”

In Chapter 1, we consider the Keller model of brand management, followed by the Berry Model in Chapter 2. The Berry Model underlines the role of customer experience in services brand management. Chapter 3 considers the implications of the Berry model for bank brand management with an analysis of the employer brand as well as the role of brand management in achieving profitable growth. This module concludes with a summary and multiple choice questions.

* Richard W Mosley, “Customer experience, organisational culture and the employer brand”, Journal of Brand Management 15, 123-134 (November 2007)


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Chapter 1: The Keller Model of Brand Management

This chapter considers the seminal work of Keller (1993) on brand management from the perspective of the consumer. Since this is a brand equity model, it is worth considering in greater detail.

First, we note that Yoo and Donthu (2001)* present a long list of definitions of brand equity, but one consensus definition (see Srivastava and Shocker, 1991)† is that brand equity is the incremental value of a product due to the brand name. It is the value that consumers associate with a brand (Aaker, 1991). We also refer to Keller and Lehmann (2006)‡ who state that brand equity can be measured either from a financial or a consumer-based perspective. However, the financial approach is likely to produce biased estimates when using accounting data. Consequently, the customer-based approach is the preferred one.

Why is customer-based brand equity important to a retail bank?

There is substantial evidence that brand equity, as determined by the consumer, is mutually beneficial to customers and bank alike. In the case of the bank, the evidence suggests a positive relationship between brand equity and financial performance (see for example, Aaker§ 2001;

Ittner and Larcker¶ 1998; Mizik ** 2005; and Kim†† 2003). Indeed, based on the above non-exhaustive list of references, we can conclude that brand equity affects the company’s cash flow, customer loyalty and creates non-price differentiation for customers – leading to a sustainable competitive advantage.

* B. Yoo, and N. Donthu, “Developing and validating a multidimensional consumer-based brand equity scale”, Journal of Business Research 52(1): 1-14 (2001).† R. Srivastava, A.D. Shocker, “Brand equity: a perspective on its meaning and measurement”. Working Paper Series, Report Number 91-124. Cambridge, MA: Marketing Science Institute, (1991).‡ K.L. Keller and D.R. Lehmann, “Brands and branding: Research findings and future priorities”, Marketing Science, 25(6), 740-759 (2006).§ D. Aaker, “The value relevance of brand attitude in high-technology markets”, Journal of Marketing Research 38 (4):485-493 (2001).¶ Ittner and Larcker. “Innovations in performance measurement: trends and research implications”, Journal of Management Accounting Research 10:205-238, (1996).** N. Mizik and R. Jacobson. “How brand attitudes drive financial performance”, In Marketing Science Institute Reports, Marketing Science Institute (2005).†† HB Kim, WG Kim, and J.A. An, “The effect of consumer-based brand equity on firms’ financial performance”, Journal of consumer marketing, 20 (4/5):335-351 (2003).


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We now consider the CBBE model proposed by Keller (1993). This model is based on four steps that constitute a ‘branding ladder’. These are as follows:

Ascending Step in Ladder Customer Question of Brand Interpretation

First Who are you? Establish the proper brand identity

Second What are you? Create the appropriate brand meaning

Third What do I think or feel about you?

Elicit the right brand responses

Fourth How much of a connection would I like to you?

Forge appropriate brand relationships with customers

The steps follow an order: from brand identity to brand meaning to brand responses and finally to brand relationship with customers. Brand Relationship is also called Brand Resonance. This establishes a pyramid of stages as follows:

304.1: Pyramid of stages in CBBE model

To make the CBBE model operational, Keller introduced antecedents of each of the four-stage variables in the above pyramid. The following diagram identifies and explains each of the proposed antecedents.


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Variable Explanation Antecedent of …

Salience The bank wants its product to be the first product a consumer thinks of when the need for such a product arises. A high level of salience means there is ‘top of mind awareness’ on the part of consumers. It is the ease of accessibility of the brand in the consumer’s memory. It is interesting that Brand Finance reported that “Citi’s ‘What’s your story’ campaign has helped position it as a ‘financial supermarket’ brand. This successful campaign was initially launched to advertise Citi Cards but has now been extended to include the entire franchise. This campaign has helped position the brand as one that can address every financial need, and has attempted to increase the salience of the brand to its customers.” (March 2011)

Brand Identity

Performance & Imagery

Performance is the way a product or service meets consumer needs. In terms of retail banking services, performance refers to the degree of compatability between the bank products and customer needs, as well as operational efficiencies that achieve speed and uniformity of delivery. Finally, performance refers to empathy on the part of bank staff for customers.

Imagery refers to the attributes of the product or service. For retail banking services, imagery may consist of futuristic bank branches that represent certain brand personalities such as exciting, cheerful, or sincere.*

Brand Meaning

Judgements & Feelings

Judgements refer to consumer opinions about the bank brand. For example, consumers may assess a bank brand in terms of its credibility or trustworthiness.

Feelings are about an emotional connection. Do customers feel secure (important in the case of retail banking) or excited (e.g., Apple) or experience fun (e.g., Disney)?

Brand Responsiveness

Resonance Resonance refers to the nature of the relationship the customer has with the bank. Keller lists four categories of resonance. These are:

a) behavioural loyalty, manifested in repeat purchases;

b) attitudinal attachment where customers visit a bank branch just because it is conveniently located. Attitudinal attachment represents a heartfelt propensity to deal with the bank;

c) a sense of community implying kinship with others associated with the brand;

d) active engagement where customers may actually promote the brand.

Clearly, the ultimate goal of the CBBE model as proposed by Keller is for bank executives to reach a stage of customer resonance that is the basis for strong customer–bank relationships.

Brand Relationships

* Aaker (1997) identifies five dimensions of brand personality. See ‘Dimensions of Brand Personality’, Journal of Marketing Research, 34, 347-357


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This table may be summarised as follows: There are six building blocks of brand equity. These are:

• Brand salience - how often do customers evoke the bank brand when making purchasing decisions?

• Brand performance - the extent to which the bank product meets customer needs

• Brand imagery - relates to the attributes of the bank products and services

• Brand judgments - deals with the personal evaluations of consumers

• Brand feelings - refers to the customer’s emotional response to the bank brand

• Brand resonance - refers to the nature of the customer-bank brand relationship

Research has found evidence in favour of the CBBE model in the banking sector. For example, for Malaysian banks, Abd Aziz et al (2010) 20

* have shown that, “strong, positive and significant relationships are also found between brand performance and brand resonance, between brand judgment and brand resonance as well as between brand feelings and brand resonance. The multiple regression results show that only brand feelings, brand judgments and brand performance have a significant influence on brand resonance”.

Keller has moved the study of brand management in a quantum leap forward and has focused the analysis on the customer. The importance of the customer service experience has, however, been overlooked by both the Aaker (1991) and Keller (1993) models. For this reason, we consider the Berry (2000) model that deals explicitly with services brand management.

* N. Abd Aziz and N. Mohd Yasin, International Journal of Marketing Studies, Vol 2 No 2 (November 2010).


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Chapter 2: The Berry Model of Services Brand Management

As stated above, what differentiates the CBBE model of brand equity from services brand management is the omission in the former of customer experience. But building brand equity without recognising the role of service quality, core banking services, people quality and a culture of customer care can be disastrous for the long-term concern of the bank. The Berry Service Branding model views brand management for a service industry from a customer perspective. This makes it applicable for retail industries in general and for retail banking in particular. 20

*

Why is retail banking different?

This question is answered in the Customer Service Quality module. Let us restate some of the key points raised in that module.

• Bank services are intangible and customers require other sources of information to reduce the risk of making an unwise purchase. The bank brand conveys relevant information to the potential customer and acts as a risk reducer.

• Customer trust is a summary of the customer experience with bank staff. Hence the professionalism of bank staff is a key requirement if customers are to overcome their so-called invisible purchase of bank services.

This raises an important issue:

The Berry model of brand equity reaches the conclusion that brand equity is determined mainly by two main factors: brand awareness and brand meaning. This is quite similar to the first two stages of the Keller model, which are brand identity and brand meaning. What differs is that customer experience is an important determinant of brand meaning in the Berry model.

We examine each variable in the Berry Model and compare it with the Keller four-stage approach.

* Studies have applied the Berry Model to the hotel industry. See for example, Kim et al, “Multidimensional customer-based brand equity and its consequences in mid-priced hotels,” Journal of Hospitality and Tourism Research, Vol 32 No 2, pp 235-254. (2008) It is interesting that they found that brand awareness and brand association influence the decision of the consumer to revisit the hotel. Notice the analogy of revisiting a hotel with cross-selling in banks.


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• For Keller, brand identity relates to the customer’s reference to the brand in making purchasing decisions. The same is true for Berry’s brand awareness, and both concepts can be broken into two sub-variables – brand recall and brand recognition. Hence, there are no real differences between the models. They both depend on customer salience that summarises how easily the brand comes to the customer’s mind at the time of purchase. The major influence on brand identity or brand awareness is communications. By this we mean marketing strategies by the bank and external communications arising from customers, such as word of mouth and testimonials. For Berry, both forms of communications have the greatest impact on new customers.

• The difference in both models is observed in brand meaning. For Berry, customer experience is the prevailing influence on brand meaning. Keller refers to customer judgements and feelings. These are likely part of the customer’s emotional connection with the brand but do not capture the full essence of customer experience quality, determined by the five dimensions of customer service quality presented in Retail Banking I. Diagrammatically, we illustrate the role of customer service quality as follows:

ReliabilityEmpathy

AssuranceResponsiveness

Tangibles

Brand MeaningCustomer ServiceQuality

ConversionAcquisitionRetention and

Customer Value Growth

Advertising

Public Relationsand Publicity

Personal Selling

Direct Marketing

Marketing Communications

Mix

Brand Identity

304.2: Role of customer service quality

For Berry (2000), customer experience arising from consistent service quality creates brand meaning for existing customers. Indeed, Berry maintains that where marketing efforts deviate from customer experience, customers refer to their experience.

We end this discussion of theoretical models with some findings in the bank branding literature. These research papers show that banks must create relationship value through customer experience to create a positive brand meaning. Here is a sample of recent findings:

a) “The study shows the importance of customer relationships in creating brand equity. Applying marketing tactics – such as price reduction or promotion – to lure customers to deal with a bank, does not contribute to customers’ sustained evaluation of the brand equity for the bank…To be able to develop brand equity through increasing satisfaction of relationship, banks must gain a deeper understanding of their customers and the role that they currently play and might come to play in customers’ lives.” *

b) “The take-away for financial service marketers is that the importance of customer satisfaction does not appear to be diminishing in these markets”.†

* Marinova et al (2008): ‘Customer relationships and brand equity in China’s banking services’. Revista de Administracao Faces Journal, vol.7, num. 3, pp. 11-27. Universidade FUMEC, Brasil† Taylor S, Hunter G, and Lindberg, D, “Understanding (customer-based) brand equity in financial services,” Journal of Services Marketing, Vol 21, No 2, 2007, 241-252


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Chapter 3: Implications of the Berry Model for Bank Brand Management

There are important implications of both Keller and Berry models.

First, customer service quality is an important driver of customer experience and hence of brand meaning. This is the most important lesson from the brand equity literature and especially from the Berry model where customer experience directly determines brand meaning. This leads to a positive effect on brand equity. And since banking products and services, as well as product price and efficient processes, are easily copied by the competition, the source of non-price differentiation is brand equity.

The second implication is linked to the concept of Internal Marketing (IM), which embodies four concepts. These are: a) viewing and treating employees as internal customers; b) training and education; c) setting quality standards and d) reward systems. The rationale for IM is that positive customer experience (the key to brand meaning) is highly dependent on employee engagement. Accordingly, bank leadership must take actions to stimulate and measure employee engagement by focusing on the four components of IM and thereby enhance customer service quality.

In particular, banks must adopt strategies to create superior customer service quality. These include:

1) The key to customer service quality and customer satisfaction is professional bank staff. A people management strategy comprises the following:

• Hiring the right people

• Enabling these people

• Motivating and energising your people

This strategy is supported by the findings of Avkiran in a study of customer service in branch banking, which found that staff conduct is an overriding dimension. A similar conclusion was recently found in the paper by Culiberg and Rojsek. A study of retail banking in Slovenia found that all five of the dimensions of service quality influence customer satisfaction and therefore banks cannot ignore any of them. Significantly, the largest effect on the variability of customer satisfaction is staff conduct.


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2) Continuing with the role of bank staff, we offer some advice for building long-term relationships. Never try to outsmart the customer even if the bank employee has more information about the transaction or product. There is no upside to such an attitude and potentially significant loss in the long run. Emotional bonding is enhanced by a healthy dose of humility. While arrogance is distracting, humility can be reinforcing.

3) HRM should recruit employees who are educated (i.e., knowledgeable) in business principles, and preference should be given to those experienced in a broad range of banking functional areas.

HRM should also evaluate new recruits for evidence of people skills, including empathy.

HRM should look for evidence of emotional intelligence when interviewing candidates. This is a must as people skills are paramount in customer care, and a personality cannot be radically altered.

4) In the same vein of customer service quality, retail banks must have a strategy to resolve customer service failures, and the GAPs model is an effective operational tool. Failures must be rectified quickly and completely, and compensation for such failures must be devised according to Prospect Theory. But retail banking executives must strive for error-free and better-than-expected service first time.

These recommendations regarding bank staff and their role in customer service quality – an antecedent of brand meaning – is part of a bigger branding issue: employer branding (see lesson below).

This module has shown how customer service quality drives customer satisfaction, which if consistently delivered can lead to loyalty. Put another way, in terms of the Berry (2000) model, brand equity is a reflection of customer loyalty. But internal branding (also called employee branding) has a direct bearing on external brand equity.

Lesson for Retail Banking Executives: The Role of Employer Brand

We have emphasised the role of bank staff on several occasions in this module. Indeed, the professionalism of staff is a key driver of customer service quality and hence of brand meaning in the sense of Berry (2000). This brings into focus the role of employer branding - as a first-choice employer - for top candidates seeking employment in banks. It is not surprising that employer branding has a direct bearing on the bank’s brand equity. This is the Berry model prediction and it is in line with the resource-based view* of the bank. Indeed, Ritson (2002)† supports this by emphasising the importance of employer branding in reducing recruitment costs, enhancing employee retention, and in the ability to offer lower salaries, compared to companies with weaker brands.

With this in mind, there is one question bank executives should ask:

Would existing employees stay with the bank, or would new recruits join, faced with a new policy that would immediately reduce the average total (monetary) compensation by 20 percent?

The answer to this question will reveal a lot about the bank’s internal branding.

Another implication of the Keller and Berry models is that marketing has an important role to play in brand identity, and less so in brand meaning. Recall in the Berry model, brand presentation that refers to internal communication such as advertising and promotion, as well as external communication based on customer advocacy, affects brand identity. In a sense, the bank’s communication with customers and other stakeholders represents the image the bank

* The Resource Based View of the Firm is discussed fully in Module 204 – People Management. At this point, it suffices to explain that this theory places a predominant role of employees in creating a competitive advantage for the bank† M. Ritson, “Marketing and HR collaborate to harness employer brand power”, Marketing 8 (24), 24, (2002)


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would like to create. This is called the bank’s presented brand. This image is created through its channels, including bank branches, promotion materials, advertisements, and websites.

External brand communication is not controlled by the bank. Berry points out that two of the most important sources of external communication are word of mouth and publicity. The first refers to customer testimonials on social media and the internet. Word of mouth is probably more important in banking services since services are more difficult to evaluate when compared to tangible products at the pre-purchase stage. Consequently, the customer will rely on experience-based information from other customers, i.e., word of mouth. Interestingly, there is evidence that word of mouth is generated by extremely satisfied or extremely dissatisfied customers.

Lesson for bank executives:

Do not think of the bank’s net promoter score solely in terms of customer satisfaction. There is another important implication for bank managers. Promoters are likely to advocate for the company by word of mouth but detractors are also likely to generate negative publicity for the bank.

Lesson for bank executives:

A strategy for positive customer experience as advocated above is likely to generate more promoters. This has the effect of reducing the size of the marketing budget.

Open Question #2

Do you agree that when the bank successfully implements customer service strategies to create brand meaning, the costs of direct marketing - or internal communication - may be reduced?

We now consider other implications for bank managers at a branding and marketing crossroads. Recall that for both the Keller and Berry models, the base of the pyramid is brand identity. The bank’s presented brand via its marketing plan is key to success for brand recognition and recall. There are further implications for the retail banking executive.

Branding New Media

Online banking has become popular and almost all banks today are able to send statements and updates to customers via the internet. Most retail banks offer facilities to pay bills and check essential information online. Marketing on the internet is supported by copious demographic data about usage habits and frequency of time spent online. There are strong feedback opportunities in terms of website visitor numbers and statistics on how long they stayed.

The internet provides opportunities for a higher level of personalisation, whereby products or solutions may be tailored to individual needs. Customer expectations can be matched with product benefits, enhancing relationship marketing.

Wells Fargo was one of the first banks to allow customers to carry out account-to-account transfers, bill payments and receive facts and information including annual reports. The bank was also among the first to link with Quicken software, allowing customers to manage their personal accounts with easy downloads. Progress continues although concerns about security persist.

Online community collaboration has become a global phenomenon. Banks must tap into social media conversations and embrace platforms such as Facebook, Twitter, YouTube and Skype. A thriving marketplace evolves when trade forums engage industry members.

Collaboration and user-generated content is extensive in such communities. Low-cost access and the immediate nature of the interaction fosters creative energy, and a sense of trust is instilled by open discussion – as opposed to the ‘sales-pitch’ approach of traditional media.


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Online communities are growing rapidly, generating commercial success for banks willing to embrace the marketplace of the future.

‘Generation C’ (for connected) spends several hours a day on social networks. Clearly this trend is a valuable resource for the retail banking sector. So far, some banks have experimented with these new channels and successfully engaged students and other early adopters with blogs and generic information about financial and economic topics. Some bank representatives offer customers and prospective customers advice on YouTube.

A number of European banks have gone a step further and are experimenting with channels such as Facebook to reach larger, mostly younger, audiences. Social media presents itself as an opportunity to sell low-margin products via a low-cost medium.

Here are some examples of innovative branding.

Commonwealth Bank of Australia is celebrating its first anniversary on Facebook reaching a milestone of more than 100,000 fans.

Andy Lark, Commonwealth Bank chief marketing and online officer, explained the bank’s strategy: “We’re less interested in the industry echo-chamber and more interested in building bridges to customers in new ways. November saw us reach an engagement rate of more than 20 percent, one of the highest globally for any Facebook page. Social platforms, Facebook in particular, provide an opportunity to support and serve customers in new ways.”

Source: Finextra: 18 January 2012

What does this demonstrate?

The answer is provided in a recent paper in the Journal of Brand Management (2012) 20, 77–79. The title is ‘Five ways branding is changing’, by Robert Jones.

“Brands are becoming more relaxed about ownership. Brands were invented as marks of ownership – burned on to cattle, originally. But today, as organisations are forced to collaborate more, brands are being shared. They serve less to divide organisations apart, more to multiply them together.

“We saw this first when we worked in 2006 for Bono’s charity (RED), which links with brands like Apple, American Express and Gap to create special RED products, and a proportion of the profit from those products goes to fight Aids and HIV in Africa. The (RED) brand and the Gap brand, for example, multiply each other’s power, and their two logos get fused together. In our work for New York City and the London 2012 Olympic Games . . . we made logos that allowed other organisations to place their colours and images inside the symbol, creating something shared. And probably the biggest multiplier brand today is Android, shared by 30 handset makers, and thousands of app developers.

“Brands started in the 1660s as the definers of the boundaries of an organisation: now, in the 2010s, they’re becoming the means by which owners, consumers, employees and financiers can transcend those boundaries.”

Lesson for Retail Bank Executives

Embrace social media. The cost of exclusion is too high.

Needs-Based Market Segmentation - Brand Identity and Brand Meaning

This is a combination of traditional marketing, which affects brand identity, and the first step in customer service quality, which matches bank products with customer needs, influencing brand meaning.


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To develop a customer-driven business, we must divide the markets into meaningful customer segments. There are several names given to this form of marketing using databases and information that individualises interaction with customers, including mass customisation and personalisation.

The information database contains data about customer segments and individual customers – demographic: age, income, occupation, family size; television viewing habits; media habits; geographic: where they live and work, travel or holiday; psychographic: high or low-risk temperament; cultural, social and lifestyle: high achiever, striver, survivor; and personality traits: calm and composed, aggressive, arrogant, friendly and so on.

Each customer is driven by a varying set of needs. We must examine those needs and cater to them more effectively than our competitors.

This requires a specialised database, capable of providing customer information on demand. The database should inform service staff of customer transactions, and be automatically updated whenever the customer uses a debit or credit card, catches a plane or makes a call from a foreign country. It should also be capable of storing facts that are ‘aged’ according to product usage, and contain up-to-date information on customer status in terms of repayment history and outstanding loan repayments.

This database must be capable of scoring behavioural patterns, such as late payment or non-payment of loans and credit cards. This is the core of the bank’s relationship management system (CRM). Vital facts are stored, including customer responses to promotional offers, queries and complaints, and the resolution of any issues communicated to the bank.

More importantly, this information must be used to analyse segments. Such analysis is useful for marketers, as it predicts how customers are likely to behave in any given situation.

Data mining uses information to deliver facts as required. For example, if the bank wants to offer education insurance to customers, it can identify those with school- and university-age children, and eliminate those who are single or married with no children.

What other types of results can data-rich information databases help banks achieve? Let us look at off-shore customers. All customer habits, on and off shore, in terms of spending, saving and investments, can provide useful information. This can be used to enable customer ‘no tax withholding’ accounts off-shore, to locate ATMs at major airports, or to provide a concierge service to help customers with lost baggage, hotel bookings and credit card upgrades 24/7.

The bank’s product range, including currency transfers and platinum cards, must be supported by excellent customer service at a branch fitted out in a style that appeals to high-net-worth customers.

Integrated Marketing Strategies

Efforts in the bank are geared so that they can be managed in tandem with other activities, such as communication, customer service, sales and distribution. Accepted offers need to go to the right business units and be activated in a timely fashion.

Call centres and account managers need to be informed and sufficiently alert to recall recent activities. Every element of banking that generates customer reaction must be activated, start and end dates co-ordinated, and loyalty rewards delivered promptly.

Major Advertising Campaigns

Being a brand is not enough per se. Being recognised as a major brand requires focus. In contemporary retail banking, establishing a competitive advantage through advertising is essential. It is an asset that could help a business survive in bad times.


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The creation of an effective advertising campaign requires a professional advertising agency, developing a clear communications strategy – across several media – and communicating the brand’s competitive advantage to prospects. Corporate and product campaigns are ongoing. Communications surrounding events are often poorly coordinated, with some customers overlooked amid mounting dissatisfaction. Planning is essential; lead times are often as long as six months for major campaigns involving TV advertising and direct marketing follow-ups, especially for product launches.

When ready to launch an advertising campaign and announce the brand’s presence in the marketplace, it is time for a final competitive exercise called competitive attribute scaling. This involves placing the competitive brands in a quadrant to see which one most resembles the bank’s offering. Using research findings, the bank brand is assigned to sectors depending on how customers identify it. Attributes range from product and service quality to innovation, as well as convenience, modernity and confidence.

We can now reposition the bank by deciding which sector we identify with.

Strategically Enhancing Brand Identity via Co-Branding

Co-branding uses more than one brand in branding a product or service. The central idea is to generate greater market reach for the product, and enhance customer awareness – a key determinant of brand identity as proposed by both Keller and Berry models. Co-branding resembles mergers and acquisitions. When a bank merges or acquires another financial institution, it expands its boundaries to gain increased market share and synergistic operational benefits. A similar point exists in co-branding a product. The bank expects to increase its market share and gain operational benefits through scale and association with another brand.

There are numerous examples of co-branding strategies that couple bank cards with airlines. For example on 1 July 2010, Abu Dhabi Commercial Bank and Etihad Airlines - the national airline of the United Arab Emirates - announced the successful launch of ‘Above’ its co-brand Visa credit cards. The two Abu Dhabi super-brands signed an alliance agreement in April 2010, forming an unprecedented partnership. ‘Above’ credit cards - now available in four variants: Classic, Gold, Platinum and Infinite - are offered to customers across the UAE exclusively on the Visa international network, the global leader in payment cards.

Similarly, ‘Mall For Africa’ introduced the first online real-time shopping card in Nigeria. This was a Visa Card powered by Skye Bank as a co-branded offering to the Nigerian market. The ‘Mall For Africa’ co-branded cards enabled cardholders to shop online. A website, Mallforafrica.com, was designed to bridge the gap between Nigeria and the US by offering a ‘one-stop shop’ online purchase service. This encouraged Nigerian individuals or companies to conduct business online. With the new ‘Mall For Africa’ co-branded prepaid card, cardholders could now shop in Africa’s largest online store and US virtual outlets.

In academic terms, the bank would be regarded as the host brand and the airline as the invited brand.

What makes co-branding successful in enhancing the host’s brand equity?

First and foremost is the notion of congruence between the partners. As proposed by Fleck and Quester (2007), the term ‘congruence’ refers to the fit between the host brand and the invited brand. But the fit or congruence of brands comprises two components – relevance and expectancy.

Research has shown that success in co-branding depends on both expectancy and relevance. But relevance is key and concurs with the proposition of Mandler* (1982),2that people essentially like predictable situations that conform to their expectations.

* George Mandler, ‘The Structure of Value: Accounting for Taste,’ in the 17th Annual Carnegie Symposium on Cognition, Margaret S Clark and Susan T Fiske, eds, Hillsdales, NJ: Erlbaum, 3-36 (1982)


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Lesson for Managers of Retail Banks

When using co-branding to enhance brand equity, pay attention to the fit between the host brand and the invited brand. While expectancy is important – and creating a positive surprise for consumers is encouraged – the other dimension (i.e., relevance) prevails. Consumers must find relevance in the co-branding strategy before being wowed by positive expectancy.


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Summary

This module considered the main issues of brand management, with special consideration of the Keller (1993) and Berry (2000) models of brand equity. Both models are consumer-based brand equity (CBBE) models but the Berry model places additional emphasis on the role of customer experience in creating brand meaning - while internal communications (the presented brand) and external communications (e.g., WOM and publicity) have a direct influence on brand identity. The lesson for retail bank manager is that the five dimensions of customer service quality - reliability, empathy, responsiveness, assurance and tangibles - are all important for the enhancement of brand equity through their direct effect on brand meaning for the consumer. On the other hand, marketing strategies have a direct bearing on brand identity. These two key factors, brand identity and brand meaning, are the foundations of the brand equity ladder. We also presented other important lessons for the retail bank executive in Chapter 3 that includes the importance of employer branding. This chapter culminates with issues related to co-branding and the importance of brand congruence for success.


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Multiple Choice Questions

1. Which of the following is not one of the four stages of the Keller Customer-Based Brand Equity model?

a) Brand Identity b) Brand Meaning c) Brand Assuranced) Brand Relationship

2. Which of the following factors is synonymous with the customer-brand relationship?

a) Salienceb) Resonancec) Feelingd) Judgement

3. In relation to the ascending ladder of the Keller Model, the answer to the question ‘How do I feel about you?’ reflects:

a) Brand identityb) Brand responsivenessc) Brand relationshipd) Brand meaning

4. Consider the statement: I am not surprised that [host/invited brand] is launching a new [co-branded product]. This statement reflects which dimension of congruence between the host and invited brands in co-branding?

a) Relevanceb) Expectancyc) The brand equity of the invited brandd) The brand equity of the host brand

5. Customer service quality directly determines:

a) Brand identityb) Brand value c) Brand meaningd) Co-branding

6. Which one of the following statements is incorrect?

a) Internal branding seeks to create the bank as an employer of choice for top candidates seeking employment in banks. b) Bank staff is identified as key to creating bank brand equity. c) Co-branding is determined mainly by customer expectancy. d) Needs segmentation is an antecedent in creating strategies for customer service quality.


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7. Internal Marketing embodies four concepts. Which is not one of them?

a) Viewing and treating employees as internal customersb) Training and education programmesc) Customer experienced) Appropriate reward systems

8. Consider the following statements:

a) The bank’s presented brand is based on internal communications that the bank controls.b) The bank does not directly control external communications such as WOM and publicity.c) The bank may in fact incur less market expense to enhance brand identity if it has a successful customer service quality programme.d) Promoters of a bank are willing to advocate for the bank more than detractors are willing to spread negativity.

Which option comprises incorrect statement(s) only?

I: a) and b onlyII: a) and c) only III: d) only IV): a), b) and c) only V): a), b) c) and d)

9. Which of the following statements concerning branding is incorrect?

a) In the Berry model, brand equity is a reflection of customer service qualityb) Customer service quality is an antecedent of brand meaning.c) In the Berry model, marketing strategies have the greatest impact on brand awareness for new customers.d) Judgements and feelings are antecedents of brand responsiveness.

10. Executives of a retail bank (the host) are considering a proposal to co-brand with another organisation. Which of the following factors should be given the highest priority in the decision to co-brand?

a) Expectancyb) Relevancec) Reputation of invited partnerd) Profitability of invited partner

Answers:

1 2 3 4 5 6 7 8 9 10

c b b b c c c III c b
