Marketing Issues Facing the HSBC Bank in the UK

Marketing Issues Facing the HSBC till in the UKKey selling issues facing HSBC Bank in the get together Kingdom and spherically How it can be improved for entering in to 2011AbstractTodays spheric vernacularing surround is highly volatile, but this does not hinder contest from being intense. Consequently, organisations such as HSBC Bank plc, the worlds local bank, admit to align their marketing strategies to improve on their brand value and localization. To enter into the year 2011, they command to call both sexual and immaterial environment(s) which inevitably hazard their warring advantage, positioning and mathematical operation.In the following, the researcher aims to explore these avenues with the view to propose an extended matter on refreshful strategies to improve upon HSBCs current standing.Table of contentsChapter 1 IntroductionChapter 2 MethodologyChapter 3 Literature ReviewChapter 4 licenceChapter 5 Conclusion and RecommendationsReferencesAppendicesIntrod uctionIn the last few years, the banking industry has undergone tremendous change in the face of orbicular transformation. As a result, executives be finding it difficult to meet competitive challenges as the pressure to become global intensifies. HSBC Bank plc, headquartered in United Kingdom, is a global business which faces the selfsame(prenominal) challenge and is being investigated in the following dissertation. The aim is to survey the key marketing issues that challenge the bank, in the UK and globally so that the researcher could further its engage in starting solutions for the same. Some of the objects that the researcher aims to achieve in this dissertation proposal atomic number 18 as followsObjectives1. To explore key out-of-door and internal environments to address major issues that plague HSBC to live on successfully as a global bank.2. To localise the marketing mix that should be pick out to be integrated in the banks marketing and competitive strategies.3. To investigate organisational functions like MIS (Management Information System) and CRM (Customer Relationship Management) to align them with the market structure.4. To evaluate the brand value at HSBC, and perhaps identify new strategies for improving its global positioning.BackgroundToday, change catalysts be being integrated by major consolidated organisations to adapt and become flexible to the changing require of consumers. The banking industry, likewise, has been following the same trend of consolidation through with(predicate) mergers and acquisitions (MA), despite the fact that these MAs are creating even more complex organisations. This can be gauged from HSBCs organisational spread. HSBC has over cytosine million node base, spread across the globe through its Customer and Global businesses. With 9,500 offices and 335,000 staff in 85 countries and territories, it is considered to be one of the worlds top fiscal brands by The Banker Magazine (HSBC Official Web site 20 08). While it is regulated by the Financial run Authority in the UK, the global nature of its military operation subjects it to be regulated by 510 central banks and authorities around the world as well (HSBC Official Web site 2008). To ensure that HSBC meets global challenges, the bank has been constantly evolving its schema. For the past decade, it has focussed on being the worlds local bank with a wide cyberspace spread to mostly foreign emerging markets to sprout unique cosmopolitan customer base to strengthen its financial standing. The four key business areas private banking, commercial banking, personal financial services and global banking markets help HSBC to align its presence with global trends such as fast growing emerging markets, world trade, and longevity in business (See appurtenance 1). In line with this focus, is the strategy to leverage brand and network to increase revenues and maximise efficiency (HSBC Official Web site 2008).This conservative positioni ng strategy had been adopted for the past decade and has paid off in terms of higher earnings, and improved performance (BBC 2001). However, recently there has been a fall in usefulness earning (UK Annual Report 2007)(See Appendix 2), which has been translated to low performance. Some of the factors that pass on afflicted the bank include inflation in developed markets slow down in emerging economies and the ongoing credit crunch, especially in the UK and neighbouring Europe (HSBC Annual Results 2007 Toxic Shock 2008). The growing importance of globalisation only emphasises on the need for integrating marketing strategies within competitive strategies to leverage future performance. According to a Deloitte report (2007), banks like HSBC, with a global focus, need to understand external and internal factors that affect them, in ordain to train comprehensive competitive strategy. While experts (Dietz, Reibestein, and Walter 2008) predict growth in global banking revenues estimated at 7 to 8 percent from 2006 to 2016, how to arms this forecast is dependent on the individual firms strategy. For this purpose, HSBC need to revise its strategic orientation.The purpose of research is to gain new knowledge through ordered and systematic systems. According to smith (1981 qt. Gliner and Morgan 2000), research is a broad discipline which must be carefully examined before adopting methods for evaluation. Whether the researcher chooses the naturalistic, experimental, survey or historical methods, the choice should be consistent with the inquiry delineate. Accordingly, research approaches in the social science discipline can be divided into the positivist or quantitative, and constructivist or qualitative approach (Mangan, Lalwani and Gardner 2004). Depending on the quantitative or qualitative icon, a researcher must choose the approach of research. A quantitative paradigm is associated with scientific methods in acquiring research results and identifies causal rel ationships (Phillips 1992 Lincoln and Guba 1985 qt. Gliner and Morgan 2000). On the other hand, the qualitative approach is a constructivist approach that studies humans and physical objects with the meanings indispensable in their social qualitys and symbolism. Considering the qualitative nature of the topic, the researcher proposes to adopt a constructivist approach which would be more appropriate in exploring the issues that affect HSBC. This is a logical proposition as it would allow the researcher to predict the causes and market behaviour based on conjectural frameworks studied through comprehensive writings refresh, a gist of which shall be explored in the next section. Furthermore, the researcher proposes this choice of research approach based on the premise that social science researches often essay to predict and control (Bryman 1995). seek questions raised are often open-ended and encompass extensive avenues before decisions can be made. Therefore, a qualitative me thod shall be suitable for the study of key issues challenging HSBC in the future.To take a brief overview of banking, the researcher has carried out a brief literature review to study the issues that surround the organisation. In the following section, the researcher shall explore the current market environment, as well as attempt to understand it through theoretical frameworks.Banking attentionAs the worlds banking industry globalises and consolidates, cross border investment barriers have fallen to give way to new and volatile markets. To serve evolving markets, banks have been notice to develop new competitive strategies that capitalise on operations, resources and functionality, and serve new types of customers. The challenge for banks today is the geopolitical risks and structural market challenges which they need to adapt to, for addressing planetary compliance of standards, demographic shifts, and developing relationships with customers. The diversified nature of the bank ing environment makes it difficult for global organisations, like HSBC, to focus. A global bank can be defined as having the widest reach in providing services to affiliates, while a local bank has narrower reach in provision of services to institutions in the country. Some of the challenges that affect these organizations are explored below1) External EnvironmentThe basic premise for gaining competitive advantage in a global environment according to experts like usher (1990) and Weihrich (1982), is through formulation of strategies that reflect the conceptual framework of the TOWS Matrix (See Appendix 3). The TOWS (Threats, Opportunities, Weaknesses and Strengths) Matrix is a systematic analysis model which identifies factors that surround the industry, and, thereafter, help identify solutions by maximising opportunities and strengths. By identifying the competitive advantage against competitors, the industry or firm can maximise the attributes it posses at the international level . These competitive advantages can be factor conditions such as skilled labour or infrastructure demand conditions such as demand of the product or service tie in and supporting industries and firm strategy, structure and rivalry (Porter 1990). However, critics are of the view that Porters formula does not provide the key to success (OShaughnessy 1996) as it does not address operative and environmental issues like culture, competitive advantage in emerging markets political and national history or role of government. In todays global banking environment, these issues play slender roles (Jones 2005). These are evident from the Deloitte report (2007) on key issues challenging the banking industry, which include off-shoring local insights for global forkinging cost-reduction emergence of hedge funds and complex anti-money launder regulations (Deloitte 2007). Not only is the global business environment of today strived with uncertainty due to emerging markets participation (Fahy 19 93 Bansal and Penza 2000), but also the technological, political and regulative environments have heightened competition.In the past decade, HSBC has focussed its competitive strategy on Europe after the slow down in Asia-Pacific region. Europe is an ideal setting for international integration based on a single market program (Berger, Smith, and Judge 2003 HSBC 2008). There are, however, issues that hinder teaching and competition including loyalty to local banks, regulatory restrictions, demand for global banking services, and technological advancement of banks. As a result, HSBC needs to rethink its current strategy.2) Internal EnvironmentAs a result of the higher up factors, the internal environment of global banks has to be revolutionised. At the forefront is the adage the customer is king. Global banks are changing their strategies to alter banking environment congruent to customers needs, rights and choices. Services and products are tailored to the living conditions and cu stomer patterns of banking use. These conditions set off alternative marketing strategies that emphasise on individuality and relationship building. Investment in technology, skills and sleeve networks, for example, has helped traditional banks to grow and profit from new sources of income (Jayawardhena and Foley 2000). In the UK, especially, the scale of investment in knowledge management and technology has helped transform the banking industry to succinctly harness potential businesses and create advantage for organisations. Learning organisations, however, is still a relatively new concept for many to understand and appreciate its implications (Harris 2002).Besides the above, global banks are also undergoing structural changes. As more and more banks become global, the traditional role of retail banking has to be revisited. (Bansal and Penza 2000).Issues that affect HSBC like credit and market risks, competency and expertise have come to the forefront, as banks diversify their b usinesses. For these reasons HSBC needs to be prepared for change management in its internal environment.3) The Marketing Mix granted the diversified nature of the global banking industry, Jagersmas report (2006) suggests that banks need to rethink marketing strategies to meet the challenges in the future by improving customer focus, innovating products, pricing products competitively and organising product information for its strategic positioning. The challenge that awaits organisations is to rethink strategic objectives that would align with the new environment. One approach is to develop a visual identity and develop a colloquy network to establish relationships with customers. The communication strategy would be the life line for the organisations strategy in adapting or changing its market setting or other environmental alterations, according to Melewar, Bassett, and Simoes (2006). Similarly, Gummesson (2002) is of the view that relationship marketing is the new approach to marketing that focuses on customer, suppliers and organisations in a complex network environment or society. It is only through these new communication frameworks that the banking sector can address the core and brand values it has to develop for successful marketing mix. (See Appendix 4) HSBC needs to re-evaluate its marketing mix in order to generate newer ones.4) Market Segmentation and TargetingIndeed, the nature of the marketing mix is no longer exclusively the 4 Ps of Price, Product, Position and Promotion but involves complex analysis of the target market and its segments. In fact, Papasolomou and Vrontis (2006) are of the view that todays banking organisations have different sets of customers and expectations. Customers are no longer limited to the walk-in type, but extend to internal customers such as employees, stakeholders and shareholders service language is not limited to providing service, but extends to standards and expectations development involves training and de velopment in motivation, and inspiration and employee incentives. To be successful, organisations must adopt alternative strategies. Market segmentation in the banking industry has changed from niche segments to accumulated customer base of corporate, private or commercial customers, although the principles for targeting them remain the same customer relationship building ease of access delivery of service through various workforce and collaborative banking strategies. As a result, banks like HSBC would need to improve upon customer focus, introduce new ideas to customers and drive aggressive campaigns (Wells Fargo and First Direct 2007) use a strong communication network (Berner and Kiley 2005) to build brand image.5) MIS and CRMWhat differentiates and establishes brands depends on the power of the brand to communicate its value to the market. According to Sinek (2008), successful communication is dependent on the banks ability to offer different products and services reflective of the customers needs. Hence, branding alone would not differentiate banks, but the humanness of the banks philosophy would. Thus, Umpqua Bank and FirstDirects popularity with customers is due to their understanding of the need for convenient banking, need for alternative products and services, and their understanding of the ever-changing world of banking. By harnessing the online banking technology, direct banking has become possible to their customers. The attractiveness of these banks to their customers is integral in the shift away from traditional transaction-based to customer based banking (Branching out 2007).Furthermore, banks have also capitalised on technological networks to expand globally to bring customers walking(prenominal) to their banks by defying geographical dispersion (Lefton 1997 Branching out 2007). However, in the process, issues like outsourcing labour to foreign regions, which are alien to the customers, and low gauge service delivery compromise the over all expectations. Banks, especially, rely on outsourcing companies for their customer service which constitutes a major part of their service/product delivery (Gottfredson and Phillips 2005). This reliance on external organisations for the banks success is volatile and, at times, detrimental to its relationship with customers. Whether HSBC should rely on these systems or not shall determine its performance in the future.6) Brand PositioningThe objective of competitive advantage is dependent on positioning of the product. A firms communication strategy and its effectiveness depend on the positioning strategies. In marketing strategies for service-oriented brands, positioning is even more critical as it modifies the intangible perceptions of the service in relation to the competition (Blankson and Kalafatis 2007). For these reasons, strategic implications of brand positioning are critical for the organisations competitive strategy. Service positioning differs from tangible product pos itioning as its characteristics are different from physical goods. Customers differentiate the service from goods through communication, standard of service delivery, and the quality of the benefits reaped. Thus, marketing communication plays a vital role in establishing the marketing positioning of brands. Consequently, Papasolomou and Vrantis (2006) emphasise on the importance of internal marketing throughout branch network to strengthen relationship marketing and the brand. In banking, this could be achieved by launching internal marketing campaigns to sustain the brand through employees and their experiences such as brand proposition, overcoming internal barriers, continual improvement and expansion. These HSBC needs to explore in to incorporate into its future strategies.From the above brief literature review, the researcher is of the view that HSBC, as a global bank, faces tremendous challenges in the near future to improve upon its marketing strategy. The above literature als o suggests that, while the current marketing strategy has been successful in launching the HSBC in the international market, the bank needs to revise and develop its marketing strategies which would sustain HSBC in global environment. Issues that plague the worlds global banking industry need to be evaluated in the future study to understand the extent and breadth to which HSBC has complied with, before competitive strategies can be evaluated.The brief literature review also indicates that todays marketing strategies are different from traditional methods adopted, especially for a service-oriented organisation. Consequently, marketing strategies for HSBC needs to be re-valuated to gauge its future performance, and perhaps devise new ones to address current and future issues. Issues like MIS, CRM, brand positioning and marketing mix shall be revisited in this extended dissertation in order to tackle the issues that plague its internal and external environment.From the above evidence, the researcher proposes an extended study in the form of a dissertation to review HSBCs performance and how it can improve upon its current marketing strategy in order to develop an integrative competitive strategy for the future. Considering the fast-paced and highly volatile banking environment of the UK and globally, HSBC needs to improve its performance in order to sustain competition. With the extended study, the researcher hopes to achieve the following objectivesa. A detailed investigation of the external and internal environment of HSBC in order to identify its strengths, weaknesses, opportunities and threats.b. Identify the marketing mix that it should adopt and integrate within its organizational strategies to enter into 2011.c. To study the current organisational function such as MIS and CRM to the advantage of HSBC and integrate into its future marketing strategies.d. Improve on its current brand value and global positioning.Author not visible(prenominal) (2008) Toxic shock how the banking industry created a global crisis, Guardian Online lendable at http//www.guardian.co.uk/business/2008/apr/08/creditcrunch.bankingAuthor not available, (2007) Wells Fargo and First Direct break away the way in the banking sector. Strategic Direction, Vol. 23, No. 6, pp. 29-31.Author not available, (June 2007) Branching out. Economist, Vol. 383, Issue 8533.Bansal, V. and Penza, P. (2000) Measuring Market Risk with Value at Risk, John Wiley and Sons.BBC (August 2001) HSBC confounds doomsayers, BBC Online on hand(predicate) at http//news.bbc.co.uk/1/hi/business/1475589.stmBerger, A.N. Smith, D. C. and Judge, J. (November 2003) Global integration in the banking industry. Federal Reserve Bulletin.Berner, R. and Kiley, D. (August 2005) Special Report The Best Global Brands. Business workweek Online Available at http//www.businessweek.com/magazine/content/05_31/b3945098.htmBlankson, C. and Kalafatis, S. P. (2007) Positioning strategies of international and multicult ural-oriented service brands. journal of Services Marketing, 21/6 pp. 435450Bryman, A. (1995) Research Methods and Organization Studies. Routledge London.Deloitte Touche Tohmatsu (2006) Global Banking Industry Outlook Growth Solutions in a Changing World 2006. Deloitte Touche Tohmatsu Online Available at http//www.deloitte.com/dtt/research/0,1015,cid%3D116421,00.htmlDeloitte Touche Tohmatsu (2007) Global Banking Industry Outlook Issues on the horizon 2007. Deloitte Touche Tohmatsu, Online Available at http//www.deloitte.com/dtt/research/0,1015,cid%3D116421,00.htmDietz, M., Reibestein, R. and Walter, C. (January 2008) Whats in store for global banking, The McKinsey Quarterly.Fahy, J. (1993) An Analysis of Competition in the New Europe, European Journal of Marketing, Vol. 27, No. 5, pp. 27,Gliner, J. A. and Morgan, G. A. (2000) Research Methods in Applied Settings An Integrated Approach to Design and Analysis. Lawrence Erlbaum Associates Mahwah, NJ.Gottfredson, M. and Phillips, S. (20 05) A sourcing strategy for enhancing core capabilities. Strategy Leadership, VOL. 33 NO. 6, pp. 48-49.Gummesson, Evert. (2002) Total relationship marketing 2nd ed. Oxford Butterworth-Heinemann.Harris, L. (2002) The development organization myth or reality? The Learning Organization, Vol. 9, No. 2, pp. 78-88HSBC Official Website Online Available at http//www.hsbc.com/1/2/investor-relations/strategyJagersma, P. K. (2006) Strategic marketing and the global banking industry elements of excellence, Journal of Business Strategy. Vol. 27 Issue 4 pp. 50 59Jayawardhena, C. and Foley, P. (2000) Changes in the banking sector the case of Internet banking in the UK. Internet Research Electronic Networking Applications and Policy, Volume 10 . Number 1 pp. 1930Jones, G. (2005) Multinationals and Global Capitalism From the Nineteenth to the Twenty-First Century. Oxford University Press Oxford pp. 137.Lefton, T. March 1997) Spending global, acting local. Brandweek, Vol. 38, Issue 13.Lincoln Y . S., Guba E. G. (1985) Naturalistic inquiry. Newbury Park, CA Sage.Mangan, J. Lalwani, C. and Gardner, B. (2004) Combining quantitative and qualitative methodologies in logistics research. International Journal of Physical Distribution Logistics Management, Vol. 34 No. 7, pp. 565-578Melewar, T.C. Bassett, K. and Simoes, C. (2006) The role of communication and visual identity in modern organisations. Corporate Communications An International Journal, Vol. 11 No. 2, pp. 138-147.OShaughnessy, N. J. (1996) Michael Porters Competitive benefit revisited. Management Decision, 34/6 pp. 1220Papasolomou, I. and Vrontis, D. (2006) Building corporate branding through internal marketing the case of the UK retail bank industry. Journal of Product Brand Management, 15/1 pp. 3747Phillips D. C. (1992) The social scientists bestiary. Oxford, UK Pergamon Press.Sinek, S. (January 2008) Chase Campaign Good for Banks For the Brand? Not So Much. Brandweek, Vol. 49, Issue 3.Smith M. L. ( 1981) Natural istic research. Personnel and Guidance Journal, 59, 585-589.Weihrich, H. (1999) Analyzing the competitive advantages and disadvantages of Germany with the TOWS Matrix an alternative to Porters Model. European Business Review, Volume 99 Number 1 pp. 922Weihrich, H. (2008) The TOWS Matrix A Tool for Situational Analysis. Long Range Planning, Online Available at http//www.usfca.edu/fac_staff/weihrichh/docs/tows.pdfAppendix 1Appendix 2Appendix 3Appendix 4