Introduction
Strategic marketing is the “management function responsible for identifying, anticipating and satisfying customer requirements profitably” (Loudon, Stevens, & Wrenn, 2004, p. 21). The focus of strategic marketing is to address marketing complexities, customers’ expectations, as well as, to align the business to changes in the market. Strategic marketing enables companies to offer superior value in their most profitable segments and to maintain strong customer relationships (Peter & Donnelly, 2010, p. 56). In this paper, the marketing strategy of Standard Chartered Bank (Vietnam) will be analyzed. In particular, the bank’s customer profile, target market, and the 4P’s of marketing will be discussed. Additionally, the bank’s competitive advantage in the Vietnamese market will be analyzed.
Customer Profile and Target Market
Even though the Vietnamese banking industry is dominated by the local banks, SCB has been able to increase its customer base and market share over the years (Vu & Turnell, 2010, pp. 115-139). Currently, SCB’s market share is, approximately, 20%. In 2011, SCB’s outstanding loans accounted for 3.1% of the total loans issued in the banking industry (Ngo, 2012, pp. 34-38). Standard Chartered Bank serves two segments namely, wholesale banking and consumer banking.
In the wholesale banking segment, the bank targets large corporations that operate in Vietnam. The bank also serves small and medium-sized enterprises (SMEs). In the consumer banking segment, the bank focuses on serving individuals (Standard Chartered Bank, 2012). The bank’s deposit products such as personal savings accounts are available to everyone in Vietnam. However, credit products such as personal loans are available only to those who have a stable monthly income. In general, SCB serves the middle and upper-income earners.
The 4P’s of Marketing
The 4P’s of marketing include “price, place, promotion and product” (Moutinhon & Southum, 2010, p. 63). In marketing, the 4 Ps are used to enhance the unique selling point of a product. Managing the 4 P’s enables a firm to improve the competitiveness of its products in the market (Parry, 2004, p. 47).
Product
A product refers to the item or service that satisfies the needs of the customers. This paper will focus on the personal loans offered by SCB. The loan amount offered by SCB ranges from VND 18 million to VND 30 million (Standard Chartered Bank, 2012). The loans are repayable through equal monthly installments over a period of 60 months or less. SCB’s personal loans are positioned in terms of the benefits they offer. Such benefits include competitive interest rates, personalized services, and free visa debit cards. Additionally, the customers are allowed to use the loans for all their personal needs. The bank also provides its clients with free credit life insurance (Standard Chartered Bank, 2012).
Price
The price refers to the amount of money paid by the customer in exchange for the good or service being offered. Setting the right price enables a firm to stimulate demand for its product and to improve its revenue (Charner, 2011, p. 74). In the banking industry, the interest rate is the price for accessing personal loans. Standard Chartered Bank follows a market penetration pricing strategy.
This strategy involves charging prices that are lower than competitors’ prices in order to gain market share (Kotler, Keller, & Brady, 2009, p. 67). SCB charges an interest rate of 15% per annum on personal loans, whereas its competitors charge 17%. Additionally, SCB’s interest rate is paid on a reducing balance, and this makes the loans more affordable. Customers who pay their loans earlier are charged a low fee of only 4% in the first year and 2% in the second year. Thus, Standard Chartered Bank’s personal loans are also positioned as the cheapest in the Vietnamese market.
Place/ Distribution
Place refers to the actual location where the product or service is sold. It also refers to the distribution channels that are used by the company to sell its products (Sexana, 2009, p. 143). Standard Chartered Bank uses an intensive distribution approach to sell its products. An intensive distribution approach involves using a variety of channels in order to reach as many customers as possible (Dolan, 2000, p. 213). The rationale for adopting this approach is informed by the fact that competition in the Vietnamese banking industry is very high. Thus, customers tend to obtain personal loans from banks that are easily accessible.
Most competitors of SCB also use an intensive distribution approach to reach their customers. However, firms that specialize in investment banking and asset management use a selective distribution approach. This approach involves providing products to specific markets rather than all markets. The rationale for using this approach is that investment and asset management products are often demanded by specific clients such as investment clubs. The firms that use selective distribution include VietinBank Securities Company and VietinBank Asset Management Ltd.
Promotion
Promotion refers to “all the methods of communication that a marketer uses to provide information to different parties about the product” (Kotler, Keller, & Brady, 2009, p. 97). Promotional activities enable firms to stimulate a positive response from the customers in regard to a particular product. Standard Chartered Bank uses a push promotional strategy to reach its customers. A push promotional strategy involves making use of the firm’s sales team and communication channels to create demand for a given product (Loudon, Stevens, & Wrenn, 2004, p. 135). SCB’s competitors also use the push promotional strategy to create demand for their products.
Specific Analysis of SCB’s Distribution and Marketing Channels
The distribution channels used by Standard Chartered Bank include the following. First, the bank’s personal loans are distributed through its branch network. Some of the major cities and provinces that are served by SCB include Hanoi, Dong Nai, Tieng Giang, and Binh Duong (Standard Chartered Bank, 2012). The branches are used as loan applications and customer service centers. Second, SCB uses online banking to distribute its loan products. In this case, the clients obtain product information from the firm’s website. The loan application forms are also obtained from the firm’s website.
The advantage of online banking is that it enables SCB to reach very many customers at low costs. Additionally, it is fast and convenient for customers who are not able to visit the bank’s branches (Cheng, Ooi, & Lin, 2010, pp. 267-287).
Finally, SCB uses SMS banking to distribute its products. In this case, the customers apply for the loans using their mobile phones. SCB has simplified the loan application process in order to disburse the loans within 48 hours after application. The competitors of SCB such as HSBC and Agribank also use online banking, branch network, and SMEs banking to distribute their loans (Dinger & Hagan, 2011, pp. 578-607). Unlike SCB, some competitors such as Agribank have partnered with microfinance institutions to distribute their personal loans. VietinBank has partnered with 840 correspondent banks to distribute its products.
Specific Analysis of SCB’s Promotional Mix
Standard Chartered Bank’s promotional activities include the following. First, the firm uses advertising to create awareness about its products. The adverts are posted in both print and electronic media. Second, SCB uses personal selling to promote its products. In this case, the bank’s sales team visits the clients and discusses with them the loan details (Standard Chartered Bank, 2012). Third, SCB uses sales promotional activities to create demand for its loans.
The sales promotional activities involve competitions in which customers are rewarded for applying for personal loans. Finally, the bank uses public relations initiatives to create demand for its personal loans. For instance, the bank’s sales executives normally write articles on print and electronic media about issues such as interest rates and the benefits of personal loans (Standard Chartered Bank, 2012). SCB’s competitors also use advertising, personal selling, as well as, public relations activities to promote their loans. However, SCB’s promotional activities differ from those of competitors in terms of the targeted audience and communication channels. For example, Agribank promotional activities may target farmers, whereas SCB’s initiatives may target formally employed customers.
Competitive Advantage
Competitive advantage “is the strategic advantage that a firm has over its competitors in an industry” (Charner, 2011, p. 88). It enables the business to be more competitive and profitable than its peers in the industry (Chang & Lee, 2010, pp. 465-478). SCB’s competitive advantages include the following. To begin with, SCB has been able to follow a consistent strategy. The firm focuses on the fundamentals of banking by managing its costs and risks, maintaining liquidity, as well as, promoting a culture of cohesion and teamwork (Dinger & Hagan, 2011, pp. 578-607). This has enabled the bank to remain profitable and able to provide loans to the public.
SCB has a strong brand image that is recognized for quality and reliability. The firm’s brand promise, ‘here for good’, has enabled it to establish long-term relationships with customers. The firm has been able to ensure customer loyalty by supporting customers through affordable loans even during difficult economic times (Masekiwa, 2011, pp. 84-88). Finally, SCB has a diversified source of income in the consumer banking segment. Consequently, the firm is still able to generate high revenue, despite its low-interest rates.
Conclusion
The success of Standard Chartered Bank in Vietnam is attributed to its strategic marketing plan. SCB has been able to increase its market share by pursuing a market penetration pricing strategy (Standard Chartered Bank, 2012). The firm positions its personal loans in terms of the benefits they offer. The channels used by SCB to distribute the personal loans include its branch network, online banking, and SMS banking.
These distribution channels are also used by most of SCB’s competitors. Standard Chartered Bank uses the intensive distribution approach, whereas firms that specialize in investment banking and asset management use the selective distribution approach. In order to increase the demand for the loans, SCB has embarked on promotional activities such as advertising, sales promotions, and public relations initiatives. SCB’s main competitive advantages include a strong brand image and customer loyalty.
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