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The marketing programme of the Royal Bank of Scotland

         The marketing programme of the Royal Bank of Scotland

What is the role of marketing in the company and to what extent do you thing the marketing strategy of the company is effective?

Seminar on Monday- 17.30-18.30

Tutor name: Kinnart Pancholt                                                                                  14.12.2008

What is the role of marketing in the company and to what extent do you thing the marketing strategy of the company is effective?

            The Royal Bank of Scotland Group has grown from small beginnings to become one of the largest financial services groups in the world. The brands operate around the globe and down the street to provide banking services for individuals, businesses and institutions.             Through the network of relationship managers across the country, RBS aim to bring a seamless “one- bank” service to all customers. Company’s business areas work with each other, providing the right mix of expertise to deliver optimal solutions to the business.

No matter how simple or complex customer requirements are RBS breadth of product offering, sector expertise and service excellence means company can deliver what it takes to help customers succeed.  The RBS, remain committed to innovation and service – in business and through  many sponsorship activities. Getting closer to customers means managing customer marketing campaigns more effectively and creating a targeted, more relevant and ultimately more profitable dialog with existing and prospective customers.

Marketing referring  to the promotion of products advertising, pricing, distribution channels, and branding. A marketing strategy is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage. A marketing strategy should focus around the key concept that customer satisfaction is a priority.When The Royal Bank of Scotland (RBS) examined its business model and growing customer base in 1997, it found that its existing marketing system could not scale to meet its current and future business requirements. The Edinburgh, Scotland-based institution turned to Prime Response  to help it pioneer and implement a system designed to automate business-to-consumer (B-to-C) communications across all traditional channels—including direct mail, call center, advertising, and events—in an effort to improve the efficiency and reliability of the bank’s marketing communications and campaign con-tact management add tools for individual customer communication planning, with functions to personalize event invitations and trigger notifications to relevant customers across multiple channels.

The latest marketing technologies support campaign optimization, individual customer communication and event planning, cross-channel management, and a high-touch experience based on personal and contextual knowledge of the customer. The value proposition of such technologies increases for banks that want to compete based on their ability to deliver high-quality, personalized care to every customer.  The RBS Group is one of Europe’s leading financial services providers. By its market capitalization of £43.5 (2002), RBS is the second-largest bank in both the U.K. and Europe and fifth largest in the world. It employs over 111,000 worldwide. The enlarged RBS Group has more than 18 million U.K. customers of its personal financial services and more than 2,250 U.K. branches.

To manage its rapid growth and series of acquisitions, RBS continues to look for innovative methods and technology to make its existing products scale to handle growing employee and revenue bases and to integrate new marketing channels. To market to and service customers judiciously and with the highest possible care, RBS wants to enable its business representatives to access all of a customer’s information on one screen. In the past, RBS used a largely paper-based in-house marketing system that required time-consuming marketing and business processes when it came to campaign planning and briefing (i.e., creating documents explaining targeting and campaign criteria and requirements). Much of the system’s records were restricted to the bank in which an interaction took place, meaning information in one location was generally inaccessible to staff in another. For a traditional bank where services were limited and customers always did business with the same branch, that approach might have sufficed. On-site bank personnel could fill in the gaps in the systems. But the rapid growth of RBS and the increased mobility and sophistication of its target customers made this system inappropriate. Fundamentally, the bank’s existing system could not scale to meet its growing marketing and business requirements. Additionally, the bank needed a way to identify its most valuable customers regardless of where their primary branch was or how they contacted the bank. A customer record in a branch near the customer’s home could not support a transaction conducted at a branch near the customer’s workplace or one conducted by telephone. RBS deployed Chordiant’s marketing solution because it believed it provided the best approach to support the level of automation it required. RBS recently started using cross-channel marketing, including outbound call-center marketing, and hopes to integrate wireless and online marketing soon. Looking ahead, RBS plans to add tools for individual customer communication planning, with functions to personalize event invitations and trigger notifications to relevant customers across multiple channels. Additionally, RBS is looking to implement tools that enable visibility across all campaigns “ahead of time”—providing a forward view of all campaign management activities—and allow the company to enter campaign and customer details 6 to 12 months before a campaign is launched. Finally, it plans to incorporate better statistical modelling and analytics tools into its overall solution. In its effort to improve customer communication and the management of campaigns across multiple channels, RBS has identified several important objectives that the Chordiant marketing solutions has facilitated. It targets its customer management solutions at global business to customer, companies in retail, financial services, insurance, telecommunications, consumer, and other industries that deal directly with very large customer bases. RBS’s business goals are: to increase operational efficiencies and reduce overall operational costs by automating and simplifying the business processes; make it easier to manage and measure the value of marketing activities across the enterprise through an integrated marketing system that increases visibility across all marketing and communication channels; Improve customer satisfaction and create and launch more personalized electronic marketing campaigns to expand market reach and increase brand awareness. By successful marketing campaign RBS increased customer response rate by 25% and improved customer retention rates. Increased the automation and efficiency of event-driven campaigns and enhanced ability to identify which campaigns are effective and deliver the highest return on investment. RBS also  reduced time to identify and resolve customer communication conflicts. Company saved customer’s time by reducing the need for multipart, paper-based forms. RBS increased ability to deliver better, more personalized services and products, which enhances the lifetime value of customers and fuels opportunities for referrals The Chordiant 5marketing module, used by RBS, helps provide the tools to identify and retain the most profitable. It also allows companies to reduce  marketing costs through more efficient operations, maximize returns through more effective campaigns, and react to market needs faster. RBS’s experience with marketing solution demonstrates that marketing automation is a valuable tool in helping a company improve its bottom line (through increased operational efficiencies) as well as improve its customer planning and marketing process. It also shows that marketing technology can neatly tie into a company’s overall customer management environment to enable employees to become part of a larger and more effective, multichannel, customer-facing force. Like its competitors, RBS recognizes the need to implement modern technologies with demonstrated methodology to help it take advantage of new revenue opportunities. Today, RBS is in a stronger position to meet customer expectations. For every business marketing tools are important to let their customers know about products, services and new technologies. It is also the way to get new customers. RBS uses different marketing tools such as : organising events, taking part in sponsorship and advertising: radio commercial , internet websites , TV commercials , and several print ads, this activity further emphasises the importance the RBS place in delivering for their clients.

Advertising  for the RBS is a very important part of business and help to market  the company by reaching thousands of people per year. Rising levels of advertising competition have made it increasingly difficult to attract and hold consumers’ attention and to establish strong memory traces for the advertised brand. A common communication strategy to break through this competitive clutter is to increase ad originality. RBS knows that advertising is a vital issue for the company. Its logo and slogan are simple. In many cases simplicity is a key to success. Slogan- “Make it happen” is a clear communication about the role of the company.. Advertising specialties or promotional aids are small items like  that can be imprinted with a company, logo or slogan. There is almost no limit to products that can be used as advertising specialties. They can be anything the client company can afford, the  sponsoring company can imprint and the customer will use. The ideal item is useful, costs comparatively little and keeps  clients’ business name in front of the customer as long as possible. Customers of RBS can see the logo and slogan on items such as pens, notebooks, umbrellas, calculators. Bank gives away those items to promote the business.

RBS knows that organising events can be a pleasure way to get to its customers and pass information about new services. Events such as business anniversaries, sales promotions, results, birthdays, trade fairs, holidays and elections are vitally important for a business and loved by clients. Existing customers by attending such as events, can experience unique atmosphere, and ensure that the company they have selected is reliable and care about them. On the other hand company can meet directly its customers and find out more about their needs and expectations. Events are fantastic opportunity both for customers and company, and great marketing tool.

Sponsorship is the fastest growing form of marketing . It is still very much in its infancy, especially in the trade show arena. For RBS sponsorship is an opportunity to broaden its competitive advantage by increasing credibility, image and prestige. RBS takes part in sponsorship, and has been involved in Golf for over a century through its association with The Royal and Ancient Golf Club of St Andrews, providing the Group with a geographic link with the Home of Golf. F1 is the ultimate racing experience. No other format pushes the envelope in quite the same way. From driver down to the pit crew, every aspect demands total focus and commitment. The Royal Bank of Scotland Group is proud to sponsor The WilliamsF1 Team and is committed to making it happen. The RBS 6 Nations Rugby Tournament is the oldest of its kind in the world and is steeped in legend and folklore.       The intense rivalry and passion of the players on the pitch is matched only by that of the fans. The Royal Bank of Scotland Group is proud to sponsor this unique tournament.             Andrew Murray has made a spectacular entrance to the world of international tennis,            The Royal Bank of Scotland is proud to support player with such passion, focus and drive.

       RBS build successful and profitable relationships on precise and effective customer communication, mutually beneficial opportunities, and the ability to meet customer needs. RBS have demonstrated how a marketing automation solution can be used to achieve efficient cross-campaign contact management and also increase customer touch and care.  The company continues to modernize and implement applications to address changes in business and technology and to fuel new opportunities. In the future, RBS hopes to increase the automation of event-driven campaigns and further integrate the marketing environment with downstream customer management. RBS  marketing solution demonstrates, that marketing automation is a valuable tool in helping a company to achieve its goals.

The marketing programme of the Royal Bank of Scotland

In this report we will be discussing the marketing programme of the company, which includes :

The marketing environment
How buyer behaviour is influencing the RBS
How the RBS has segmented its market and positioned itself
Marketing mix of the company.

1.      The marketing environment of the Royal Bank of  Scotland:

The marketing environment is composed of the forces and actors that affect a company’s ability to operate effectively in providing products and services to its customers. We can classify these forces into two main categories: macro-environment and microenvironment. Macro-environment includes the economic, social, technological, physical and legal forces, while microenvironment consists of the suppliers, distributors, customers and competitors.

Pic.1. Marketing environment.

·         Economic forces:

Economic growth and unemployment:

Because of the low growth rates the unemployment level is high, affecting customer spending power. It is a bit short-sighted to think that redundancies will save any company (and that includes banks with their shares) from going down. When people do not have a job, they do not have money to spend, therefore they won’t make any company any profit and hopefully the lending laws change so that people can’t get credit cards, loans and mortgages that easily anymore so the banks won’t make profit either.

·         Social forces:

World population growth, changing age distribution and the rise  in the number of two-income earners affect the RBS. Most of the forecasted world population growth is expected  to occur in Africa, Asia and Latin America. Many marketers tend to ignore these countries because they are home to bulk of an estimated four billion people worldwide who live in poverty. However, companies such as the RBS is increasingly focusing its attention on these so called ’pre-markets’ and is recognising that they can turn a profit while having a positive effect on the livelihoods of people. For example the RBS has 1900 branches in Asia, 24 900 in America, 7900 in Europe and 100300 in the United Kingdom.

On other force is the rising proportion of young people, who have much higher commitments in terms of  mortgage repayments than older people.

·         Political and legal forces:

Marketing decisions can also be influenced by political and legal forces, which determine the rules by which business is conducted. Close relationships with politicians are often cultivated by organisations, both to monitor the political mood and also to influence it. An example for the political force is: The Royal Bank of Scotland plc , Edinburgh, Scotland, a foreign bank within the meaning of the International Banking Act, has applied under sections of  the IBA to establish a branch in Greenwich, Connecticut. The Foreign Bank Supervision Enhancement Act of 1991, which amended the IBA, provides that a foreign bank must obtain the approval of the Board to establish a branch in the United States. Notice of the application, affording interested persons an opportunity to comment, has been published in newspapers of general circulation in Greenwich, Connecticut (Greenwich Time), and Stamford, Connecticut (The Advocate), on November 3, 2006.

·         Physical forces:

Physical forces are the use of environmentally friendly ingredients in products, recyclable and non-wasteful packaging, protection of the ozone layer, animal testing of new products, pollution and energy conversation. Marketers need to be aware of the threats and opportunities associated with each of these issues.

 In order to protect our environment the RBS encourage people to use the RBS Carbone Offset Service. Most of the world’s leading scientists and politicians agree that ‘greenhouse gases’ are causing climate change. Whenever we burn fossil fuels like coal, oil and gas – in our factories, offices and vehicles – carbon dioxide  is produced. This is a greenhouse gas, so the more that goes into the air, the more the world heats up. This change can look small, but it’s enough to have a big effect. From now on you can use you can use the new Carbon Offset service to help your business have a positive impact on the environment.

·         Technological forces:

Both people’s lives and companies’ fortunes can be affected significantly by technology. Technological advances have given us body scanners, robotics, camcorders, computers and many other products that have contributed to our quality of life.

In relation with the RBS one the most useful technological tool is the online banking. The RBS envisages major cost savings as a result of the take-up online banking, because their branch staff will be less tied up with day-to-day transactions. This means that staff can be freed up for other services such as providing advice and selling products, including pensions and life assurance. For customers, too, bill paying and share buying is faster and often more convenient when conducted online. The Internet has became a key part of the marketing strategy  of  the RBS and many other banks. The RBS have made it cheaper to pay bills online than at a branch, encouraging its customers to switch to the new channel.

2.  How buyer behaviour is influencing the Royal Bank of Scotland:

Pic.2. Buyer behaviour.

·         Consumer buying behaviour:

Consumer buying behaviour is influenced by three factors: the buying situation, personal influences and social influences.

Six personal influences are

§  information processing,

§  motivation,

§  beliefs and attitudes,

§  personality,

§  lifestyle and

§  life cycle.

Examples for the personal influences are:

§  personality – for RBS marketers it is important to know that consumers make purchase decisions to support their self concept.  Using research techniques to identify how customers view themselves may give RBS marketers insight into products and promotion options that are not readily apparent.  For example, when examining consumers an RBS marketer may initially build marketing strategy around more obvious clues to consumption behaviour, such as consumer’s demographic indicators (e.g., age, occupation, income).  However, in-depth research may yield information that shows consumers are purchasing products to fulfil self-concept objectives  that have little to do with the demographic category they fall into (e.g., senior citizen may be making purchases that make them feel younger).  Appealing to the consumer’s self concept needs could expand the market to which the product is targeted.

§  lifestyle – products and services are purchased to support consumers’ lifestyles.  The RBS Marketers have worked hard researching how consumers in their target markets live their lives since this information is key to developing products, suggesting promotional strategies and even determining how best to distribute products.

Social influences include:

§  culture: As part of  the RBS’ efforts to convince customers to purchase their products, marketers often use cultural representations, especially in promotional appeals.  The objective is to connect to consumers using cultural references that are easily understood and often embraced by the consumer.  By doing so the marketer hopes the consumer feels more comfortable with or can relate better to the product since it corresponds with their cultural values.  Additionally, smart marketers use strong research efforts in an attempt to identify differences in how sub-culture behaves.  These efforts help pave the way for spotting trends within a sub-culture, which the marketer can capitalize on through new marketing tactics (e.g., new products, new sales channels, added value, etc.).

§  reference groups: Identifying and understanding the groups consumers belong to is a key strategy for marketers.  Doing so helps identify target markets, develop new products, and create appealing marketing promotions to which consumers can relate.  In particular, RBS marketers seek to locate group leaders and others to whom members of the group look for advice or direction.  These opinion leaders, if well respected by the group, can be used to gain insight into group behaviour and if these opinion leaders accept promotional opportunities could act as effective spokespeople for the marketer’s products.

Marketing managers need to be aware of these influences and their effects on consumer behaviour, as well as their implications for marketing decision-making.

·         Organizational  buying behaviour:

Organizational buying is characterized by the nature and size of customers, complexity of buying, derived demand, negotiation and reciprocal buying. Three key influences on organizational buying are the buy class, the product type and the importance of the purchase to the buying organization.

Number of Buyers

While there are several million companies worldwide that operate in the overall business market, within a particular market the number is much smaller.   Additionally, within some industries buyers are highly concentrated in certain geographic areas.  Consequently, compared to consumer products, marketing efforts are confined to a smaller targeted group.

Promotional Focus

Companies who primarily target consumers often use mass advertising methods to reach an often widely dispersed market.  For business-to-business marketers the size of individual orders, along with a smaller number of buyers, makes person-to-person contact by sales representatives a more effective means of promotion.

3. How The Royal Bank of Scotland has segmented its market and positioned itself:

To implement the marketing concept and satisfy customer needs successfully, different product and service offerings must be made to the diverse customer groups that typically comprise a market.

Market segmentation involves the division of a diverse market into a number of smaller sub-markets. The objective is to identify groups of customers with similar requirements so that they can be served effectively, while being of a sufficient size for the product or service to be supplied efficiently.

Also, through segmenting markets, companies can examine growth opportunities and expand their product lines. Consumer segmentation criteria may be divided into three main groups: behavioural, psychological and profile variables.

Pic.3. Consumer segmentation criteria.

The Royal Bank of Scotland also makes use with this chart on the above. The bank serves a lot of products like different kind of bank accounts, credit cards, mortgages, loans, etc. for different kinds of people. For example, when we look at the bank accounts, the Student Current Accounts where they promise to give you an interest free overdraft up to 2,750 pounds whilst you are also a student plus loads of great savings and discounts on concert tickets %25 and on travel %10 discounts. Or if you are a graduate student with a Graduate Current Account, the bank offers you to have it for 3years and it comes with an interest-free overdraft up to 2000 pounds and a graduate loan where you can borrow up to 15,000 pounds at a tailored rate. Other then these, it also again gives the same amount of discounts on concert tickets and on your flights. By offering, lots of kinds of products for different ages and for different profiles the bank is creating a more competitive environment and expanding its product lines which also leads to a growth.

4.Marketing mix of The Royal Bank of Scotland

A key marketing activity is the management of the company’s marketing mix. The marketing mix consists of four major elements: product, price, promotion and place.

Place:
The Royal Bank of Scotland, want all their customers to be able to access their services in the way that is most convenient to them. This means ensuring they offer a range of options to meet people’s very different needs. Internet and mobile banking are great resources for many people, enabling them to manage their money at their convenience. But for individuals without internet access, the maintenance of their extensive branch network is essential. Their goal is to provide a service that is appropriate to the varied needs of all our customers.

·         Maintained their no branch closure policy; they have 2,278 branches in the UK and 1,620 in the US.

·         Launched a mobile phone banking service

·         Opened a further ten branches at Ulster Bank, taking its total to 282

·         Upgraded or refurbished 198 branches in the UK

·         Extended Saturday opening across the UK

They also provide an extensive mobile branch service to meet the needs of our rural customers.
Promotion:
Electronic Gift cards are a powerful component of any strategic payment program. Gift cards replace expensive and inefficient paper vouchers with a product proven to reduce costs, improve efficiencies and increase sales.

The Royal Bank of Scotland currently offer a wide range of gift card solutions to retailers including electronic gift cards, insurance replacement programs and themed cards.
Product:
Bank of Scotland offers its customers a wide range of financial products and help. There are range of Personal, Wealth Management, Business and Corporate products and services. Credit Cards, Finance Companies – Investment, Leasing, Motor ; Finance Planning Consultancy, Life Assurance Companies, etc.
Price:
RBS understand that price is an important marketing element. To survive  in competitive  environment RBS has to carefully set prices of its services. It offers a wide range of products and services at different prices.

References:

Ø  Rachman, David J. (1928) “Marketing strategy and structure”, Prentice-Hall, 1974.

Ø  Foxall, Gordon R. (1984). “Corporate innovation : marketing and strategy”. Croom Helm,

Ø   Doyle, P. (1944) “Marketing management and strategy” Prentice Hall Europe, 1997.

Ø  Rapp, Stan. (1987) “Maxi marketing : the new direction in advertising, promotion, and marketing strategy”  McGraw-Hill,.