The aim of the report is to provide an insight into marketing in the perspective of a chosen banking institution and its various products. The banking institution chosen here is Hong Leong Bank and the products relate to personal, priority, business and global markets (hlb.com, 2018). It represents a financial service company of Malaysia operating regionally and has its presence felt in Hong Kong, Vietnam, Singapore, China and Cambodia. This bank is focused on technology and emphasizes on the development of the financial capabilities for serving the clients across these five geographies. The Hong Leong Bank (HLB) has its listing in the Bursa Malaysia and is a part of Hong Leong Group. The bank has strong heritage of Malaysian entrepreneurship with the headquarters in Kuala Lumpur. The report commences with a company overview and goes on to discuss product or market orientation. The report also discusses about the differentiation and the value proposition of the company along with a discussion on the customer needs, wants and demand. The report also focuses on segmentation, targeting, and the positioning strategy. The report also provides an insight into the factors influencing the consumer behavior and the nature and the level of the competition.
Hong Leong Bank was originally known as the Kwong Lee Mortgage and Remittance company that later became known as the Kwong Lee Bank Limited in the year 1934 and is the oldest and renowned financial institution of Malaysia (hlb.com, 2018). MUI group acquired the Kwong Lee Bank in the year May 1982 which was known as Malayan United Bank (MUI) Berhad in 1983. In the year 1989, it came to known as the MUI Bank. Under this banner, it grew from close to 11 branches to 35 branches across the nation. In 1994, the MUI Bank Berhad was acquired by the Hong Leong Group and became renamed as the Hong Leong Bank Berhad. It then merged with the EON Banking Group in the year 2011 that positioned the bank as the fifth largest banking group having assets over close to RM180 billion. In the regional context, HLB represented one of the first banks of Malaysia in the year 2008 for entering the Chinese banking sector with close to 20 percent strategic holding in the Bank of Chengdu Co. Ltd. However, HLB remains committed in embedding itself towards the communities where it operates for meeting the customer needs. In the year, 2012, the bank reached out to the customers with communities where it is able to operate via various channels (hlfg.com, 2018). This involved the distribution network of close to 300 branches on a local scale including the sales and business centre of Singapore, Malaysia, Vietnam, Cambodia and Hong Kong along with comprehensive range of electronic and complementary channels including the self-service terminals. In the same year, the bank also launched a sub brand that brought together the bricks and clicks that put forward range of life starter services and products for meeting the needs of young community.
3.1 Product Range Offered: The Hong Leong Bank offers various products related to personal banking, priority banking, business banking and products related to the global market (hlb.com, 2018). The personal banking products includes personal loan, current and savings account, credit cards, balance transfer, flexi payment plan, online fixed deposits, call for credit plus and increase in the credit limit. The priority banking products includes the premium deposits and the loans and financing. The business banking products mostly relates to the deposits suiting every need of the business. It also includes banking and comprehensive schemes for the SME (Small and Medium Sized Enterprises). The global markets include the Forex and the investment products. The report discusses about the personal loan service put forward by HLB under the personal banking category. The personal loan of HLB comes with various features and benefits. These include (hlb.com, 2018):
3.2 Company Orientation: Market orientation is defined as the form of the organizational structure where employees’ remains committed in constantly creating superior value or take up sequence of marketing activities that result in better performance (Urde, Baumgarth & Merrilees, 2013). It is found that the market-oriented organizations have better performance compared to the ones that remains less market oriented. The market-oriented organizations focus more on adapting the products and services to the expectations and the needs of the customers. Hong Leong Bank follows market orientation as it designs its products and services according to needs and wants of the customers. In other words, the bank puts forward a focused production by focusing primarily on the customers. Besides, HLB also have a concentrated strategy where its functions remains aligned with its strategic vision for meeting the needs of the customers. HLB also clearly communicates about how its products benefit the customers thereby earning marketing advantages. In addition, the bank is also able to generate long-term profitability by delivering and consistently understanding the wants of the market place. In most of the cases, one-time buyers are transformed into the repeat customers with the final goal of turning them into loyal customers. This is because the loyal customers makes more frequent purchases and in huge volumes and are less susceptible to the competition (Boso, Story, & Cadogan, 2013). This shows how HLB have better ability of remaining successful and viable in retaining its marketing concept.
Value proposition refers to the business or the marketing statement that the company uses for summarizing why the consumer should buy the product or use the service (Osterwalder et al., 2014). The statement is used for convincing the potential customer that a specific service or product will add value or better solve the problem than similar other offerings. The product chosen here is the personal loan whose value proposition lies in offering an exclusive rate of 6 percent per annum when applied online. This helps in differentiating HLB from the banking industry. Besides, the personal loan would be beneficial for the customers as it is applied anytime, anywhere and allowed customers affordable installments for tenure of two to five years. The fast approval of the loan also acts beneficial for the customers. People between the age of 21 to 60 years with an annual income of RM$24,000 have eligibility to apply for the loan.
According to Kotler (2014), human need is the state of deprivation of certain basic satisfaction. Individuals require clothing, food, shelter, safety, belonging and self-esteem. Such needs do not emerge because of insistence of the society or the marketers. In fact, they persist in the texture of the human condition and human biology.
Wants refers to the desires for the specific satisfiers of the needs. People might have fewer needs but their wants might be many (Roberts, Dant & Lim, 2015). They remain constantly shaped and reshaped by the social forces and the institutions including schools, families, churches and the business corporations.
On the other hand, demand refers to the wants for the specific products backed up the willingness and the buying of buying them (Pearson, 2016). Companies should put across a measurement considering not only the number of people wanting but also the number of people expressing their willingness and actually buying the product.
Personal loans represent the ways of fulfilling the needs and the wants of the consumers and are an excellent means for the borrowers in fulfilling the financial needs (Oliver, 2014). Personal loans are taken for varied reasons like renovation of home, buying car, consolidation of the debts and acquiring funds for the higher education of children. Hence, personal loans are useful for fulfilling all the needs and the wants. Personal loans remains categorized as secured and unsecured. Depending on the individual requirements, an individual might avail secured as well as unsecured personal loan. Nevertheless, the demand for the personal loan within the banking sector has been steady irrespective of the weaker economy of Malaysia. There have been rising levels of stress bubbling in that particular space and it represented that only the loan segment continued to have double-digit growth. Further, it was found that the gross impaired loans (GIL) in personal segment grew at 31.7 percent on a yearly basis and accounted to close to RM 1.37billion. The growth pace of the personal loan has been much faster than the mortgage and the credit card segments. In other words, the GIL growth within the personal loan segment stood close to 15.1 percent in comparison to the 3.4 percent credit cards and 5.6 percent mortgages.
Demographic as the basis of segmentation offers straightforward base for the purpose of segmentation since they depend on the easier to access information and put forward classifications that are easily interpretable , measurable and straightforward (Kahreh et al., 2014). In the banking sector, demographic segmentation is based on the following:
Gender: Hong Leong Bank (HLB) initially targeted the men in comparison to women since the woman were considered less confident with financial services.
Age: Financial institution like the Hong Leong Bank targets the schoolchildren who have the propensity to save. HLB tries to teach the students the benefits of the savings through special savings schemes. HLB also tries to target the university students as they always have a shortage of cash and is in need of overdrafts, loans and special insurance. They also target the first time workers and the adults due to their higher purchasing power. HLB also target the ageing population as needs for financial service changes varies due to change in the services and the income of the people.
Geographic: Financial institutions as the Hong Leong Bank undertakes this type of segmentation based on (Berger et al., 2016):
Psychographic: Banking institutions like HLB undertake this type of segmentation based on the beliefs, attitudes, preferences, personality, interest and knowledge. For instance, two individuals belonging to the same age might exhibit varied purchasing behavior based on the financial services because of the difference in knowledge, interest and attitude.
Behavioral: Financial institutions as HLB undertakes this type of market segmentation based on the discriminatory power put forward by the social class. The aspirations of the various social classes are as follows (Agénor & Montiel, 2015):
Targeting Strategy of the Bank
A financial institution as HLB has a targeting strategy of full market coverage where it targets all the segments and attempts in providing most of the financial service required. The bank follows this strategy since it is one of the largest financial institutions possessing the capacity of serving the entire market. Nevertheless, the full market coverage can be either undifferentiated where the focus of bank remains on the customer needs thereby reaching a large number of the customers or differentiated where the focus lies on serving different and multiple needs.
The products of HLB position itself through various attribute, offering various benefits, through price/quality by offering various privileges with minimum amount of subscription, through user and through application (Solomon et al., 2014). Some of the product and services available includes investment loans, credit cards, insurance, deposit, personal banking, priority banking and club rewards for customer loyalty.
Figure 1: Positioning Map for the Products of Hong Leong Bank
Source: By Author
Economic conditions: The decisions for consumer spending are influenced by economic conditions of the market (Rani, 2014). This is true for the purchases related to houses, vehicles and the household appliances.
Personal preference: At a personal level, the preference for personal loan remains influenced by the priorities, likes, dislikes, values and morals.
Influence of Group: This has an impact on the decisions made by the consumer. The preference for taking up a personal loan is often influenced by a group comprising of classmates, family members, neighbors and the immediate relatives (Oliver, 2014)
Purchasing Power: This plays a crucial role in influencing the decisions of the consumers in taking up a personal loan (Pate & Adams, 2013). The consumer analyzes the individual purchasing capacity before undertaking a decision for buying the services or the products.
Hong Leong Bank follows an oligopolistic market structure. The banking industry is competing in such a market structure since an oligopoly market remains characterized by the few sellers whose numbers remains limited (Baldwin & Scott, 2013). This market structure is a special kind of imperfect market comprising of larger number of buyers and fewer number of sellers. Moreover, either the oligopolist manufactures differentiated or homogeneous products where the products remain differentiated by ways of trademark, service or design.
The direct and indirect competitors of Hong Leong Bank are as follows:
Conclusion:
On a concluding note, it can be said that the competitive strategy of the bank should pivot on competitive delivery comprising of quality people, market intelligence, result oriented capability, entrepreneurialism, localized community embedment and the manner in which it scales itself in building newer names. It is however necessary to re-segment customers in marketing the changes and re building compelling proposition in scaling sustainability while being opportunistic in a tactful manner.
References:
Agénor, P. R., & Montiel, P. J. (2015). Development macroeconomics. Princeton University Press.
Armstrong, G., Adam, S., Denize, S. and Kotler, P., 2014. Principles of marketing. Pearson Australia.
Baldwin, W., & Scott, J. (2013). Market structure and technological change. Taylor & Francis.
Berger, A. N., Bouwman, C. H., Kick, T., & Schaeck, K. (2016). Bank liquidity creation following regulatory interventions and capital support. Journal of Financial Intermediation, 26, 115-141.
Boso, N., Story, V. M., & Cadogan, J. W. (2013). Entrepreneurial orientation, market orientation, network ties, and performance: Study of entrepreneurial firms in a developing economy. Journal of Business Venturing, 28(6), 708-727.
hlb.com. (2018). Retrieved from https://www.hlb.com.my/en/personal-banking/about-us.html?icp=hlb-en-home-footer-aboutus
hlb.com. (2018). Retrieved from https://www.hlb.com.my/en/personal-banking/news-updates/hlb-announces-first-quarter-results-q1fy19.html
hlb.com. (2018). Retrieved from https://www.hlb.com.my/en/personal-banking/onboarding.html?icp=hlb-en-home-footer-applynow
hlb.com. (2018). Retrieved from https://www.hlb.com.my/en/personal-banking/loans/personal-loan/personal-loan.html?ecp=OWOSAAPLCPFSD141118L0
hlfg.com. (2018). Retrieved from https://www.hlfg.com.my/about-us/our-services/hong-leong-bank
Kahreh, M. S., Tive, M., Babania, A., & Hesan, M. (2014). Analyzing the applications of customer lifetime value (CLV) based on benefit segmentation for the banking sector. Procedia-Social and Behavioral Sciences, 109, 590-594.
Oliver, R. L. (2014). Satisfaction: A Behavioral Perspective on the Consumer: A Behavioral Perspective on the Consumer. Routledge.
Oliver, R. L. (2014). Satisfaction: A Behavioral Perspective on the Consumer: A Behavioral Perspective on the Consumer. Routledge.
Osterwalder, A., Pigneur, Y., Bernarda, G., & Smith, A. (2014). Value proposition design: How to create products and services customers want. John Wiley & Sons.
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Pearson, S. (2016). Building brands directly: creating business value from customer relationships. Springer.
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Solomon, M. R., Dahl, D. W., White, K., Zaichkowsky, J. L., & Polegato, R. (2014). Consumer behavior: Buying, having, and being (Vol. 10). London: Pearson.
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