Describe HSBC Report on Operating Worldwide.
HSBC Bank Australia Limited is a part of HSBC Group operating worldwide. The bank offers complete banking facilities and is one of the leading banks in Australia. It started its operations in the year 1965 in Australia. It has been listed on the exchanges of Hong Kong, London, New York, Paris and Bermuda (HSBC in Australia, 2016).
The target market is the target group of customers to whom company wants to sell its products or service. To develop a plan for marketing, it is imperial for a company to identify its target market (Pinson, 1996).
Market Segmentation After analyzing the needs and demands of the customer, selecting the customer who would want the product and segregating them from the rest is called segmentation. Strategies should be planned according to the clientele that fall in the segment that the company wants to cater. The market is segmented on several bases, on variables like age, gender, income, family size, race, religion, nationality then it is called as demographic segmentation. Behavioral segmentation is when behavior, usage, and buying pattern were being considered. When it has been based on the boundaries and geography, it is termed as geographic segmentation. When lifestyle, activities, and interest determine the purchase decision, then it is referred to as psychographic segmentation (Larsen, 2010)
Targeting and positioning Selecting the target customers of the segment are called targeting. Making the targeted customers own the brand that company produces is called positioning. The label should leave an impact in the minds of the consumer; it should have a sustainable portion in the mind frame of the consumer. The loyalty of the customer with the brand is because of the positioning strategies were undertaken to place the product in the minds of the consumer, which compels them to repeatedly buy the particular brand (Tanner and Raymond, 2012)
The bank divides its various services into broad segments of the market and follows segment marketing.For Credit Cards The bank follows Demographic and Geographic Segmentation. While offering its credit card services to the consumers, the bank divides its market on credibility basis. Customers were identified on different geographical grounds like, urban, sub-urban and rural. The next segmentation done is by income, occupation, and purchasing power. The primary targets for this type of product are customers located in urban and sub-urban areas because of the rapid development and economic growth there is the rise in spending capacity, which in turn will lead to higher demand for the product if it was targeted to the right audience. The market can further be segmented on buyer’s behavior, knowledge and acceptance towards the product. The positioning strategy that the bank has undertaken is to target the clients and offer a variety as per the needs of varied customers. The bank offers four different types of credit cards, Premier World, Platinum Qantas, HSBC credit card and Platinum credit card. Along with this, the APR charged, and the annual fee is kept low as compared to the other banks. To create an impact in the minds of the consumer the bank also offers Travel accident insurance and identity theft resolution services along with the card as additional benefits. There are rewards for transactions made in foreign and they are not charged any fee. The bank has positioned itself as a leading bank that offers variety of cards to its customer with the ease of service (Compare Credit Cards, 2016
The bank offers two types of savings account; one is flexi savers account, and the other is a savings account. It follows Demographic and Geographic segmentation. To increase this service, the bank will address the customers of rural and sub-urban areas. Customers who are from rural areas with the demographics of low income and savings are the target customers for a savings account and the clients who are flexible with their savings, as mostly seen in sub-urban areas they are the target customers for flexi saver account which offers monthly bonus interest. The bank has positioned itself to cater to pair needs and goals of savings (Bank Accounts, 2016).
The bank follows demographic and psychographic segmentation. The clients who have high net worth and have the tendency to put in money to yield more money while taking minimal risk are the target customers. The behavioral attributes like lifestyle, activities, and risk taking abilities are the major factors that influence these kinds of customers. Bank positioned itself as a leader by offering structured investments strategies, online share trading platform and most importantly future retirement and financial planning options to its customers (Investments, 2016).
HSBC has created a unique brand name globally regarding positioning itself. It has been able to create a distinct image and occupy the minds of the target market. It has been able to compete and excel regarding service quality with other international financial institutions and was known as a truly global bank with international banking network.
HSBC has an edge when it comes to its competitors; it offers better service reagrading safety and reliability at a low price. It has products and services according to the need of its customers, and that gives it the competitive advantage and hence HSBC has overcome its industry rivals in gaining the trust and loyalty of its customers.
The mapping could be done for features along with price, Safety, and reliability along with price and Service quality along with the price.
5 being the highest scale in features and 1 being the lowest, 5 being the highest price and 1 being the lowest. The company would get (4, 4) in this aspect.
5 being the highest scale in safety and reliability and 1 being the lowest, 5 being the highest price and 1 being the lowest. The company would get (5, 4.5) in this aspect.
5 being the highest scale in service and 1 being the lowest, 5 being the highest price and 1 being the lowest. The company would get (5, 5) in this aspect.
There are many factors that affect the business environment. The marketing environment is majorly influenced by these two factors: Micro and Macro. Macro factors comprise of Political, Economical, Social, Technological, Legal and demographical factors that influence the business. Micro Factors includes the people, competition, customers, suppliers, and other internal strategies and policies affecting the company (Groucutt, Leadley, and Forsyth, 2004).
Factors that affect HSBC largely are economic factors, since banking industry is largely affected by economic policies and economic activities of the region. In times of economic slowdown the bank might be in a tight squeeze, because banks usually lend money for long and borrow money on short. That means, a depositor has to be repaid on demand immediately and the person who has availed loan, i.e., the creditor might not be able to repay in an economic slowdown.
Another factor affecting banking industry is Political issues; if a nation faces political insatiability, then the policies would be affected. Technological advancements affect the development of the banking industry. But HSBC is technologically equipped, and their basic drivers are high productivity and customer orientation. They excel in using technological platforms to enhance their customer service.
Shareholders- Shareholders will always get preference. The government, local public, internal people, and all the people related to the organization in one or another influence the policy of the company towards them.
Suppliers- Bank always maintains its link strongly with its suppliers they are the most important aspect, in the case of HSBC, government bodies and regulatory acts as suppliers.
Customers- HSBC targets Retail consumers, Business Consumers, International and Government consumers and reseller market. HSBC believes in maintaining a healthy relationship with its consumer base with the aim of long-term profitability.
Market Intermediaries and Competitors- companies who help the bank in performing extra services to connect with its clients play an important role in the growth of the organization. Competition always makes a good business environment. HSBC faces competition in the local as well as international market as there are large key players in the banking industry competing with HSBC.
Analyzing the Strengths, weakness, opportunities and threats of the organization will help the company in structured planning. These elements will help the organization to identify the internal and external factors that are in favor or against the growth of the company. Identifying traits or characteristics of the company that gives it a competitive edge over its competitors is categorized as strength. The trait that gives it a disadvantage over others was categorized as weakness. Opportunities that the business could exploit to its benefit were termed as opportunities and threats are the elements that could pose potential trouble for the business (Fine, 2009).
The cost advantages from the know-how of experts and immense value of patent and trademark. Influential brand name and accessible distribution network are some of the strengths of the company.
High-cost structure is the main weakness of the company.
Elimination of trade barriers and untapped market needs by coming up with technological innovations are some areas of opportunities that a bank can explore.
Prominent threat that the bank faces is consumer shifting to another brand and strict regulations or growing trade barriers.
Political factors at all level, global and local are analyzed because they play a major role in formulating the policies.
Economic factors at a national, regional and global level were monitored. Economic performance of the market is the key input required to plan the strategy for development.
Social factors analysis of the market is done by of demographics and culture so as to tap the unfulfilled needs.
Technological factors enable the business to address the issues and leave an impact in the minds of the consumers. Technology is one factor that drives the growth of the modern business. HSBC always tries to adopt the modern technology.
Consumer perception refers to the process through which a customer makes a decision whether to get associated with the brand or not. The perception shows his awareness towards the brand and his acceptance towards it. There are three stages of consumer perception: exposure, attention, and interpretation (Martinez, 2012).
The product offered by HSBC is one time buy, and it is more of a long term association. When the consumer is buying something that will have an impact for a long time, then the buying behavior becomes more complex. The bank has a strategy to deal with different consumers, i.e., by offering different products in the same category. The customers who are more conscious of the class and society and have high net worth would tend to look for high end product and services offered by the bank, whereas customers who are in middle or low-income group would look for the bank that gives them high returns on investments and accounts and assures them about principal amount Security. The pricing strategy of HSBC has been successful even though the annual fee was levied and the interest rate is high due to high demand. On the other hand, the Bank might not be able to attract the customers who are cost-conscious and whose only interest is in the facility of credit. Many customers tend to relate the quality and brand name with the price. Such consumers would have a positive impact in their minds about HSBC.
The global presence of the bank ensures communicated delivery channels and faster services. The customers are benefited effectively by this worldwide presence of the bank; it provides ease in services, and this would not give them an opportunity to look for substitutes. The bank engages in direct marketing and has effective communication with its customers; this, in turn develops loyalty towards the brand. Another strategy adopted by the bank is to associate itself with big brands, which in return provides benefits to the customers while using HSBC products. The global presence, faster service and low cost along with association with big brands and in return customer benefits develops a positive image in the minds of the consumer.
It refers to the set of strategies undertaken by the company to promote itself in the market. It is made up of 4 Ps which includes Price, Promotion, Product and Place (Richter, 2012).
Marketing strategies formulated by HSBC are such that they influence its customers in a positive manner. They were aimed at adding value to the brand along with creating awareness and delivering value to its clients. These strategies influence perspective as well as existing customers to associate with the bank for a long term.
Price- It simply means that what is the value of the product. The price of the product is dependent on production cost, supply and demand and various other indirect and direct factors. Each business follows different pricing strategies (Hoffmann, 2008).
Product- It refers to the item that the company intends on selling. The product must deliver some performance and should be able to compete in the market. It should have some standards and deliver some value (Gummesson, 2012)
Promotion – All the activities undertaken by the company on selling the product in the market were included in the promotion. In this the company can include all sources of promotional activities, whether direct or indirect, print media, word of mouth, press reports, and paid advertisements. (Barker and Angelopulo, 2005)
Place- It refers where the sale were made. The main aim of this mix is to make the purchase of the product easy for the consumer. If the location of the product is not right, no matter what the price is or promotional activities are the product would still not be preferred by the consumers. The location is an important factor while choosing the business setup. (Smith and Taylor, 2004)
Marketing mix for credit cards
Product- the Bank offers a variety of credit cards. It is to cater to the needs and wants of different customers. The four types of credit cards offered by the bank deliver value to its clients.
Place- the international presence of the bank makes it easy for the clients to avail this facility anywhere. The ease of buying this product is what makes it attractive to the consumers.
Price- Though the credit cards offered by the banks were charged at a little higher price than the market, but this also assures the clients of the quality of the product and service that they are bound to get.
Promotion- HSBC focuses on establishing communication with its clients. They undertake direct and indirect promotional ways of promoting their product. They have formed an association with brands and in turn, their clients are benefited with this association. Bank has also created a positive image ensuring continuous customer support.
Price- The price of this product offered by the bank is comparatively moderate when it comes to its competitors. It is a product that is worth its price.
Product- The bank offers two types of savings account to its clients. There is variety in the product as per the needs and wants of the client segmentation. This product delivers value to its client.
Promotion – The bank focuses on promoting this product by giving a higher rate of return and associating reward points with it.
Place- ease of making the transactions is a highlight for the bank.
Price- The price of this product offered by the bank is comparatively high when it comes to its competitors. It is a product that is worth its price because it offers the security of the principal amount along with giving maximum returns on the investment.
Product- The bank offers various types of investment products to its clients. There is variety in the product as per the needs and wants of the client segmentation. This product delivers value to its client by their requirements.
Promotion – The bank focuses on promoting this product by giving a higher rate of return and assuring the client about the safety and reliability.
Place- ease of making the transactions anywhere in the world is a highlight for this product. Technological platforms to avail this facility are also an advantage to the bank.
Recommendations and Conclusion
HSBC is a key player in the banking industry. It offers a variety of product and services to its clients. The bank has performed well in the market regarding giving returns and dividends, and also securing capital regarding economic slowdown. The business strategies adopted by HSBC has garnered a lot of appreciation. Their policies towards stakeholders, clients and employees have been praised. But due to increasing competition in the market, HSBC should consider revising the rates of its certain products so as to capture untapped market and clients that have opted for substitutes. Actively and strategically analyzing the pricing is essential. Diverse values need to be added to the company’s strategies to strengthen its position in the market. Establishing Crisis management service should be one step that the bank should take in the coming years. Monitoring portfolios on a mark-to-model basis are required. The bank offers excellent service when it comes to bank accounts or credit card facilities, but it should also widen its horizon in investment, pruning, portfolio management and advisory. The company has its views on its brand equity and has a competitive edge in the market. But this could be easily affected by large key players. There is a lot of unmet demand in the market, and to survive and sustain, a key player might change their strategies, HSBC has to think a step ahead when it comes to this. Reviewing operational capability is foremost. They need to be technologically advanced and creative along with being efficient and flexible. It is the time they took aggressive steps to capture the untapped market demand and plan a response for competitors’ new product introduction. Modification in the strategies as per economic conditions is the most important aspect of the banking industry; HSBC should not lack behind in it. Reviewing the systems and policies is mandatory for growth. Reporting the limitations of the framework is essential if the HSBC has to truly become a global bank.
References
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