Case Study: Financial Services – Brand Positioning
Financial Services – Brand Positioning
Case 1: Improving a Bank’s Profitability Through Strategic Brand Positioning
Before Hiring Ethridge
- The large regional bank was unprofitable due to a high cost of funds and slow loan volume.
- The bank was considering offering a new line of credit cards to increase loan volume (assets), a product normally sold through direct mail.
- However, resources for increasing product sales through direct marketing were extremely limited.
- Therefore, the client needed to know not only which products would improve profitability, but which the bank was best positioned to sell.
- The client suspected the slow loan sales volume was partly due to a confused image in the marketplace, resulting from recent acquisitions and name changes.
After Hiring Ethridge
- Ethridge conducted our proprietary Marketing Opportunity Analysis, which included our Brand Positioning Analysis using perceptual mapping.
- This analysis revealed:
- What the market segments for each type of financial product (Installment Loans, Home Equities, Credit Cards, CDs Money Markets, Regular Checking Regular Savings) expected from a financial institution
- That the client bank’s image was indeed confused and the market did not perceive the bank to be meeting the expectations of any of the seven product segments.
- That the client could not realistically compete effectively in credit cards due to strong larger, national banks that had significant competitive advantages in credit cards and due to the client’s severe relative competitive disadvantage in credit cards.
- That the client needed to reposition its brand image in the direction nearer to a particular bank (“Bank A”), where it could effectively compete to generate a low cost of funds by increasing regular checking and regular savings deposits, while generating high interest income from marketing various types of installment loans (e.g., auto loans, school loans, etc.) — rather than credit cards — to improve profitability.
- That this repositioning strategy would require the client to compete more effectively with this particular bank (“Bank A”) in convenience.
- Based on these findings, Ethridge recommended:
- That the bank improve profitability by concentrating the limited direct marketing sales/promotional budget on selling three specific products: Regular Savings, Regular Checking and Installment Loans;
- That the bank better meet the convenience expectation of the target market segments for these three particular types of financial products by relocating non-performing branches closer to the branches of the smaller competitor ( Bank A);
- That the bank develop a mass media image campaign designed to reposition the client’s image in the direction of Bank A, by emphasizing convenience attributes as an extension of existing strengths as a hometown bank.
Results of Implementing Ethridge’s Recommendations
- The bank implemented Ethridge’s recommendations exactly as prescribed. As a result:
- The bank significantly lowered their cost of funds by . . .
- Generating more Regular Savings and Regular Checking Accounts that paid low interest rates, and by . . .
- Generating significantly more installment loans (e.g., auto loans, school loans, etc).
- The bank significantly improved its Brand Image/Position as a bank that met the market’s expectations.
- As a result, the Director of Marketing who hired Ethridge & Associates for this project was promoted to Vice President of Marketing.