NAB’s Marketing Plan:

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September 6, 2013.

TABLE OF CONTENTS

Content……..……………………………………………………………………………….Page

1.1History of NAB…………………………………………………………………………..3

1.2 Operation Industry……………………………………………………………………..…3

1.3 Product Category…………………………………………………………………………4

1.4 Major Competitors……………………………………………………………………….4

1.5 NAB Opportunities and Threats…………………………………………………………5

2.1 Segmentation…………………………………………………………………………….5

2.2 Segmentation Schemes…………………………………………………………………..6

3.1 Product……………..……………………………………………………………………7

3.2 Product Life Cycle…………….………………………………………………………….7

3.3 Branding…………….……………………………………………………………………8

4.1 Pricing………………………………….…………………………………………………9

5.1 Distribution Strategy……………………………………………………………………..10

6.1 Promotion…………………………………………………………………………………11

6.2 Promotion Strategies…………………………………………………………………..….12

7. References……..……………………………………………………………………..……13

Marketing Plan for National Australia Bank

1.1 History of National Australia Bank:

The NAB (National Australia Bank) is a global financial service corporation offering that offers a comprehensive array of financial and banking services within its major markets of Australia, United Kingdom, New Zealand as well as Asia.

The National Bank of Australia was established in the year 1858. It was originally known as the National Bank of Australasia and it rapidly became famous to be one of the most established financial and banking institutions within Australia. The Bank grew by taking over several other banking organizations within Australia. The major reason for the growth of the group till now was its merger in 1981, with the Commercial Banking Company of Sydney when both formed what is presently known as the National Australia Bank and the National Australia Bank changed its name in 2008 to be knows as NAB (NAB, 2013).

1.2 Industry of Operation:

NAB remains one of the top biggest banking and financial institutions in Australia based on customers and market. Globally, based on market capitalization, the bank is ranked 17th. It operates in 10 nations serving over 8 million business and consumer customers and about 2 million wealth management consumers.

The National Australia Bank operates 1,808 service centers and branches and over 4600 ATMs internationally. Whereas NAB operates in a number of jurisdictions internationally, the bulk of its revenues are obtained from the Australian market. NAB owns two commercial/retail banks in Clydesdale, Yorkshire and the UK. In New Zealand, the bank runs BNZ while in the United States, NAB operates Great Western Bank, which focuses on agribusiness (NAB, 2013).

The Wholesale and Business Banking divisions of the bank have offices in Shanghai, Tokyo, Singapore, Hong Kong, New York and London. These offices are designed to serve the needs of the institutional and corporate customer that comprise market risk management (for instance interest rate and foreign exchange hedging), bond issuance and trade finance.

1.3 Major Competitors of NAB

NAB competes with other three major Australian banks such as the Commonwealth Bank of Australia, Westpac and ANZ. The bank faces direct competition in the US, the UK, Asia, New Zealand and Australia where its subsidiaries offer home loan services, alongside investment, wealth management and banking services (NAB, 2013).

1.4 Product category Analysis

NAB is a global financial service provider and its personal financial banking products include; home loans, credit cards, insurance, personal loans, accounts and internet banking. The core activities of the bank comprise wealth management and banking. Beside, NAB is involved in institutional banking operations and global capital markets. Products under this category include; custody and transactional services, wealth management, corporate, business and retail banking.

It is important for NAB to understand its product because this way the company will be able to develop product features that will make it successful in the market. By understanding the product, will develop features that will satisfy the wants and needs of the customers, differentiate its products from other “me too” products, provide value for value and stimulate consumer interest.

1.5 Opportunities:

The acquisition of Great Western Bank by NAB is likely to improve the bank’s revenues. NAB bought the US bank for US$900 million to enhance its presence in the agribusiness market sector in North America. Great Western Bank has assets to a tune of $3.8 billion and about 800 employees and more than 100 branches in six US states.

Expansion in China will improve market share and revenue. The bank will target the increasing agricultural trade between Asia and Australia as they seek to expand further into the fastest developing region in the world (NAB, 2013).

Threats

Domestic and global economic deceleration continues to affect financing facilities and business volume.

Stiff competition within the Australian financial system will have an impact of the bank’s profitability.

2.1 Segmentation:

Market Segmentation refers to a strategy of marketing that entails dividing a wider target market into consumer subsets with common needs and thereafter developing and implementing programs to target their desires and needs using touch points and media channels that effectively allow reaching them (White, 2012). The aims of segmentation would be to minimize the risk while deciding how, when, where and to whom the product will be marketed to and to improve the marketing efficiency by specifically directing effort toward the designated market segment in an approach that is consistent with the characteristics of that segment. In developing the product, NAB adopts a differentiated marketing for designated market segments. The scheme enables the bank to meet consumers’ needs in each market segment, thus boosting marketing success

It is critical for NAB to undertake market segmentation while offering Home Loans because it helps the company to develop effective marketing mix which precisely satisfies customers’ expectations among the target markets (Barry & Weinstein, 2009).

Market segmentation is one of the most fundamental pillars of any marketing strategy that is classifying market into discrete groups of consumers with distinct behavior, characteristics or needs that requires different marketing strategies and products. NAB takes this process in two steps; the bank first identifies a broad product-market that which suits the resources of the company and disaggregating all the potential needs with certain generic markets. Second, it separates these broad product-markets so as to determine particular target markets.

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2.2 Segmentation Schemes:

Psychographic: In this segmentation method, customers are grounded based on their social class, values, personality and lifestyle (Fifield, 2006).

Geographic: This criterion divides market into cities, countries, regions, states, or nations. The geo-cluster method integrates demographic data along with the geographic data to develop a more accurate and specific consumer profile. For NAB this implies that they have to open new branches and shift locations to sustain the increasing banking demand within those segments.

Demographics: This entails partitioning market into groups based on variable such as education, occupation, income, family size, gender, age and race. The variables of demographic segmentation are some of the most common grounds for segmenting consumer groups. Consumer wants are closely associated with variables such as age and income. Bases on those facts, the bank can segment its market based on income and age as well as family size (Bartels, 2006).

Behavioral: Customer can be grouped based on their attitude toward, knowledge of, response or use of the product. It is principally based on the consumer behavior. The approach focuses on their relationship with firm or product, for instance light or heavy users, brand switchers of brand loyalty (i.e. for one bank to the other).

Establishing these super-segments enables the bank to broadly categorize customers into targets that can be easily defined. In all these major segments, NAB further refines them based on established financial needs, wallet potential of customers share, and current profitability. As earlier indicated, the bank utilizes these market segments in all is global franchises and assigns an international segment manager to optimize the performance of every market segment on global standing point.

3.1Product

Product Definition:

Product refers to the combination of services and goods offered to consumers to satisfy their wants or need (Gabbott & Hogg, 2007). The main reasons NAB should understand its product and services it to enable the bank differentiates its product from other service providers and earn its competitive edge. Product positioning enables the bank to improve marketing activities and boost sales by understating where its product lies within the competitive arena. The bank can better position its product by understanding the competition, the products and brands that the product competes with. Getting the perception of the target market regarding the product and its attributes, and by developing a perceptual map and establish all the locations of the competing product.

3.2 Product Life Cycle:

A new product or services goes through a series of stages starting from the introduction stage, to growth, to maturity and finally decline stage. This progression is termed as the product life cycle and is related to marketing situation changes, hence influences the marketing mix and the marketing strategy (Churchill & Peter, 2003).

The product profits and revenue can be plotted as life-cycle stages function as illustrated in the diagram below.

Fig 1 Life cycle of a product

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The marketing mix programs of a given stage will be based on the chosen strategy. For instance, the product could be changed when it being rejuvenated or can stay unchanged when it is being liquidated or harvested. Also, the price could be retained when the product is being harvested or drastically reduced when liquidated.

Introduction Stage: This is when NAB launches a new product into the market. There are low sales and actually the bank loses money from the marketing and set-up cost of the product catch on with customer needs and demands. In this regard, the bank has had the product for a couple of years, and they have not promoted it until the last six months. At Growth Stage the product sales begin to grow since consumers become more aware of the offering. The bank has really started to apply it more often and developing more buzz within the city. During maturity phase, which Home Loans is in, there is slow sales growth because a number of competitors are offering this product and also a number of customers have already acquired this product. Therefore, for NAB to succeed sales expenses and heavy advertisement would be required to maintain profits and sales from dropping off. At the decline phase, sales begin to decline. Only a few banks provide the product. A better and newer product is provided, which satisfies the needs of the customers instead of the current offering. The product promotion slows down and eventually the product dies off. This is because the variable loan rates on the side of the consumers are on the decline. The bank has not done adjustable mortgage rates for years; however they still have consumers who still have them.

3.3 Branding:

Definition of Branding:

Branding is the act of creating a unique image of a product or service in the minds of consumers’ majorly through promotions or advertising programs. A brand is a design, symbol, sign, term or name or mixture of them intended to identify services and products of a seller and differentiate it from the rest. Therefore it is rational to appreciate that branding is not about getting your target market choose your products over your competitors, but rather getting your prospective customers view you as the company that offers solution to their needs. Effective branding will provide the following;

Clear delivery of message

Confirming the bank’s credibility

Solidifies user loyalty

Motivates the consumers

Emotionally connects the bank’s target prospects

For NAB to succeed in branding, they need to understand the wants and needs of their prospects and customers. They do this by integrating their brand initiatives through their company in all the public contact points. Their brand resides within the minds and hearts of prospects, clients and customers. A strong brand is fundamental as the struggle for customer increases each day. It is therefore, critical for the bank to utilize some time defining, researching and developing its brand. In any case, its branding would be the source of promise to its customers. The bank has developed a cohesive system of identity for the company that is confident, fresh and bold, emphasizing on its core colors to improve brand recognition. They introduced a “un-banklike” voice tone and a number of unique tools for various business streams so as to enable the company to relevantly communicate to their audience. This fresh identity won the 2012, Melbourne Design Award.

4.1 Pricing: This is the process of establishing what the business will get in exchange for the product. Pricing elements include competition, market place, product quality and market conditions. It is important for NAB to understand pricing while offering Home Loan to enable them to align with how various customers value their services and products. The bank needs to substitute the traditional pricing strategy with a data driven holistic method, which includes customers’ purchasing patterns, behaviors, preferences, needs and price sensitivity. A holistic data driven pricing approach creates faster and more value than financial institutions can earn from reductions in fixed and variable costs. Studies have indicated that price improvement of 1% yields 1.5-4.5 times the margin impact of improvement cost of 1%.

As discussed above, the price remains a critical component of the marketing mix. If the bank fails to give the product the correct price, this would ultimately affect the sales and can result into the products failure. The sales and price of the product are hence, related to one another.

4.2 NAB’s pricing strategies:

Cost plus profit: This approach is the most sensitive model to costs; the bank calculates the cost of product development adds profit margin and requires the customer this price.

Price settlement based on the competition: This approach factors in the price competition patterns, hence the price will be the same to one of its competitors, however allows for the profit margin and expenses coverage.

Price settlement to penetrate: NAB can settle on a lower price for Home Loan with the objective of fast winning a huge quota of the market, and hence to establish a substantial and faster market penetration.

The objective of pricing strategy for the bank is to incorporate the overall objectives of the organization. For example, one of the objectives of the bank is to be the biggest banking and financial provider; therefore the pricing strategy objective would be to improve the sales volume. This is why the bank would lower home loan prices than what its competitors are offering so as to boost the volume of request and sales (Peter, 2011).

5.1 Distribution:

Place refers to the location where the bank’s product can be acquired. The place could mean the physical branches or virtual branch (the Internet) (Gabbott and Hogg, 2007). It is important for NAB to understand the place since it is the means through which the product gets to the consumers. It is also important because if the bank fails to offer the product at the right time and at the right place, only a few customers will consume it.

The distribution strategy of the bank is both direct and indirect. Direct distribution is where the bank sells to the customers straight through the Internet. The indirect distribution involves selling through the retail banking services. The company must consider the cost of selling through various distribution channels because they affect the company’s profitability as other channels are more costly than others. The bank must also consider the places where the target market would mostly purchase the product (Farris, Bendle, Pfeifer, & Reibstein, 2010).

The bank uses call the Internet, mobile; call centers, ATM and branches to interact with their clients, though recently they have adopted social media. The present economic situations offer the bank an opportunity to determine channels, which are critical to their consumers and offer a positive experience. The bank is moving its customers from high-cost channels to low-cost ones, hence minimizing their overall cost-to-serve. Within the banking industry, there is an increasing trend to attain a seamless multi-channel integration by banking and financial institutions who desire to make their customers’ experience channel-agnostic. This move will help the bank to leverage its distribution channels by providing right products to the right consumers through appropriate network, resulting to total cost savings and improved customer experience.

The bank is faced with a highly saturated market where the price and home loan product are not anymore the fundamental differentiators, hence increasing the retention costs. Innovations of improved and faster delivery of the desired products will assist the bank to offer a differentiated customer interaction and experience, hence improving customer retention.

6.1 Promotion:

Promotion refers to reminding and information people and persuading them to use, recommend or accept an idea, service or product (Hackley, 2010). It is the alarm that the company sounds to allow customer be that they exist and why they need to care. When promotion are neglected, the banks fabulous services and product will not garner the interest of on-the-move and preoccupied customers.

Initially personal selling, social media, public relations, advertising, and other communication channels are deployed to create product and brand awareness. The ultimate goals include growing the revenue, getting customers, and gaining market share. The message that the company formulates and the media it chooses are critical in creating effective promotional programs that attain these communication objectives (White, 2012).

The promotional objectives that NAB has adopted for home loan product are to inform the potential customer and to persuade him/her. Because of the inherent nature of intangible services, NAB customers rely heavily on the subjective impression as opposed to concrete evidence. When the bank launches a new product, it can only make its target segment be aware of it through promotional activities. They do this through a number of forms for instance direct mailing, sales campaign, word of mouth, or press advertisement. A company can easily make a customer if there is a great demand for the product or if the product is unique, but often this is not the case. Therefore, the second core objective of promotional activities would be persuading the customer to purchase the offering in preference other similar offering that are available within the market. This persuasion also can be in various forms for instance, developing an emotional strategy with the aim of presenting the benefit of the home loan through identifying the home loan with strong customer needs. A part from the above core objective, promotion also has other supplementary objectives for example, building image of the bank, promoting the establishment of new started sector (Hackley, 2010).

The Advertisements are geared toward attracting the masses and it reaches a huge number of individuals at ago. Advertisement remains one of the essential instruments of promotion and it is often done through the media and billboards. For NAB, the three main aims of advertisement include, making customers be aware of the product, remember the product and feel positive about the product. The correct message is communicated to the right market using the right media. NAB does its promotions via bus social media and television. The bank also uses television programs and print ads because they are critical medium of marketing for promotion. Personal selling remains the most effective method for establishing customer’s convenience, preference and actions and because of its personal interaction it allows feedbacks and the necessary adjustments.

NAB has started using the phrase “break up”. The bank is quitting the traditions and methods governing the main Australian banks (the Big 4) and wants to try something fresh. It is a direct and simple message that is sure to attract notice and inspire several unsatisfied customers to take a change and step out (NAB, 2013). The new twist on mortgage promotion is done with amazing activities. NAB want Westpac and CBA customers to join them by paying off their exit charges, which is about $700.

7. References

Barry, J., & Weinstein, A. (2009). Business psychographics revisited: From segmentation theory

to successful marketing practice. Journal of Marketing Management, 25, 3–4.

Bartels, R. (2006). The history of marketing thought (2nd ed.). Columbus, OH: Grid

Churchill, G., & Peter, J. P. (2003). Marketing: Creating value for customers. Burr Ridge, IL:

Irwin Professional Publishing.

Farris, P., Bendle, N., Pfeifer, P., & Reibstein, D. (2010). Marketing metrics: The definitive

guide to measuring marketing performance. Upper Saddle River, NJ: Pearson Education.

Fifield, P., (2006), Marketing Strategy, (2nd edn.), Butterworth-Heinemann, Melbourne.

Gabbott, M., and Hogg, G., (2007), Contemporary Services Marketing Management, The

Dryden Press, London.

Margaret T, (2011).Management Foundations. Australia, McGraw HillRix,

Peter; (2011). Marketing a Practical Approach. Australia, McGraw Hill.

Hackley, C. (2010). Advertising and promotion: An integrated marketing communications

approach (2nd ed.). Thousand Oaks, CA: Sage Publications, Ltd.

White, S. (2012). Principles of Marketing (1st ed.). San Diego, CA: Bridgepoint Education, Inc

NAB’s corporate website, http://www.nab.com.au