Issue 1: Description of St George
St George was founded in 1937 as a building society in Kogarah, NSW. By 1992 it had outgrown the building society concept and was granted a banking licence. St George has since grown further to be a major player in Australian banking, and in 2008 was acquired by Westpac (www.stgeorge.com.au/about-us).
Today, St George is the 5th largest bank in Australia behind its parent Westpac, Commonwealth Bank, ANZ and National Australia Bank (Net Promoter Score Report, February 2010). They have over 400 branches around Australia and over 1.8 million customers (pers. comm. 15 April 2010). St George is a full service bank, offering retail and business banking, wealth, insurance and superannuation products. The remainder of this paper will concentrate on the retail banking segment.
Marketing can be implemented in a variety of organisational cultures and orientations (MM U1 2010). St George has used marketing and product orientations in developing their marketing activities. Companies using a marketing orientation determine the needs and wants of target markets and then deliver to those needs (MM U1 2010). St George demonstrates this through a strong customer orientation and seeking to delight customers at every interaction. CEO Gail Kelly stresses that customers need to be at the centre of everything they do and the need to not just satisfy them but delight them every time (email comm. 1 October 2009). This has resulted in the highest net promoter score of the major banks (Roy Morgan Research February 2010). A company with a product orientation creates products offering the most quality, performance and features (MM U1 2010). St George research indicated that even though they have a full suite of high quality and award winning products, they were not being considered when consumers were looking for a new product. In line with a product orientation, St George is focussed on lifting the proportion of customers that consider St George's products through building on the strength of their brand which is valued for service, and adding product attributes that promote a full product set and expertise in providing advice (Investing in a stronger future, February 2010).
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St George has a strong brand in the market place, ranked 77 in the top 500 Global Financial Brands 2010 (St George Bank Limited Annual Report 2009). A brand is an expression of all elements of the business and marketing strategy (MM U2 2010), and the St George brand is very important in helping St George to appeal to a different market than their parent Westpac(pers. comm. 15 April 2010). The brand proposition is “The only bank that can deliver strength with soul…because at St George you can experience all the reassurance and convenience of a big bank with the genuine care and service of a small bank”. This proposition promotes the unique positioning of St George, as well as leveraging its heritage of being a bank that cares for customers (Big Enough Small Enough, February 2010). Another element of the brand is quirkiness and fun and this is symbolised by Happy the Dragon. Happy has been St George's mascot for nearly 40 years and is leveraged on advertising, public functions and merchandising. Happy differentiates St George from other banks by promoting friendliness and caring (http://www.stgeorge.com.au/ .../ archive.asp?id=129).
Issue 2: The 5 C's
The 5 C's (Company, Customers, Collaborators, Competitors and Context) provide the foundation for developing a marketing strategy (MM U1 2010).
Company: An organisation's strategy centres on matching organisational resources to market opportunities (MM U1, 2010). St George has leveraged security and its friendly helpful staff to create a secure bank that supports customer needs. The company's weaknesses include the spread of branches outside of NSW and the perception of a lack of product breadth (Big Enough. Small Enough, February 2010).
Customers: Identifying the customer needs to be met determines what an organisation produces (MM U1, 2010). St George's retail business provides banking products to the mass market with customers expecting convenience and service. Additionally, industry data indicates that most bank transactions (over 90%) are carried out online and not in a branch (www.banksers.asn.au/ ...ArticleID=580), so St George places a lot of importance on the internet as a customer touch point.
Collaborators: Companies rely on collaborators to create, deliver and sustain value to customers. St George's collaborators include funding providers and brokers who on sell St George products (St George Internal Strategic Fact Book 2010). St George also uses advertising agencies to develop campaigns and research houses to measure customer advocacy and brand consideration.
Always on Time
Marked to Standard
Competitors: St George's competitive environment can be understood using Porters 5 forces (MM U1 2010).
Intensity of Competitive Rivalry
High. The top 5 banks in Australia serve the majority of customers in the market (Net Promoter Score Report, February 2010)
Threats of New Entrants to the Industry
Low. The industry is strictly governed and banks require a banking license (Banking Act of Australia, 1959)
Risk of Competition from Substitute Products
Low. Financial services products are heavily regulated by the Australian Prudential Regulation Authority (APRA)
Relative Power of Suppliers
High. Relatively few suppliers, large demand for lending
Relative Power of Buyers
Low. Customers can shop around and change banks, but tend to remain at the same bank. Average customer churn is 8-10% (St George Internal Strategic Fact Book)
The context that an organisation operates in defines what can and cannot be changed (MM U1 2010). St George's context can be understood using PESTLE analysis. Politically, the Australian financial services industry is represented by the Australian Banking Association who lobbies state and federal governments as required. Economically, banking products are commoditised with common features, but varying prices. Socially, banking is available to all but perceived as a necessary evil by most (www.canstar.com.au/... /customer-satisfaction-mar-09.pdf). Technologically, back office efficiency and customer access points are key priorities (www.banksers.asn.au/ ...ArticleID=580). Legally, the industry is heavily regulated and controlled by APRA. Environmentally, banks need to be responsible members of society, including use of resources and providing sustainable lending to others.
Issue 3: Collecting Information
Accessing timely, accurate and appropriate market information is viewed as both a marketing tool and a critical strategic asset (MM U4 2010). In developing the current marketing strategy, St George gathered quantitative and qualitative information, holding 76 focus groups and receiving over 4000 completed surveys. This data was used to evaluate brand ideas, positioning and campaigns and identified that only St George is both big enough to be trusted and small enough to care (Investing in a stronger future, February 2010). St George also identified attributes that a customer looks for in a bank and has used this information to shape marketing initiatives and projects. Their goal is to leverage the small enough attributes and grow the big enough attributes (pers. comm. 15 April 2010). Ongoing St George have engaged Jones Donald Strategy Partners to collect weekly data on customer advocacy and brand consideration. These measures show how likely customers are to recommend St George and if they will consider St George for their next financial product. The weekly data is used to refine their market strategy and monitor their position in regard to competitors and the impact of business and market decisions.
Competitive forces shape an organisations performance (MM U1 2010). St George's competitors are the big four banks in Australia, as it is more profitable to steal customers from them than regional banks. Their typical customer has a sufficient product set and financial potential to make them profitable (pers. comm. 15 April 2010). In markets where St George does not have a large presence (eg QLD, WA, VIC), second tier banks such as Bankwest and Suncorp are also competitors (pers. comm. 15 April 2010). Information gathered from Jones Donald Strategy Partners and Roy Morgan regularly is used to inform St George's competitive offers and strategies.
Buyers of banking products collect information from friends, relatives, in branches and over the internet as these products are generally limited problem solving purchases (MM U3 2010). St George provides information to customers through multiple channels such as branch, telephone and internet in the expectation of seeing an increase in new customers as a result of increasing customer consideration (St George Strategic Brief 2009).
Issue 4: Segmentation, Targeting and Positioning
Segmentation, targeting and positioning (STP) is a process of breaking up the total market into segments that share common properties (MM U5 2010). St George divides retail customers into three customer segments – mass, mass affluent and small medium enterprise using demographic traits (St George Strategic Brief 2009).
Customers with less than $350k in lending or $200k in deposits
Customers with lending in excess of $350k or deposits of $200k or more
Small Medium Enterprise
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Customers who own a small business with lending less than $250k or deposits less than $100k
To be successful, marketing segments should be heterogeneous between, homogeneous within, measurable, substantial and actionable (MM U5 2010). The retail segments identified above are heterogeneous, with no customer overlapping a segment. The segment boundaries are periodically adjusted to ensure that they fit both the business model and customer base (pers. comm. 2 March 2010). Segments should be homogeneous within, with similar characteristics, wants, needs and behaviours that are likely to respond to a given marketing mix (MM U5 2010). Because each segment is defined by income and lending, customers are typically divided into similar economic circumstances and have similar product needs. Each segment is also measurable and identifiable as customer balances are carefully tracked as part of normal business. Because each segment is substantial and actionable, St George is able to create differential customer interaction models by segment that become more personalised as lending and savings increase (pers comm. 2 March 2010).
To measure customer value, Roy Morgan has created value segments (www.roymorgan.com/.../ value segments). St George targets different value segments for each customer segment. In the mass market, they have targeted ‘traditional family lifers'. Roy Morgan's definition of this segment is smaller household Australian home owners with relatively stable incomes. In the mass affluent segment, two value segments are targeted - ‘socially aware' and ‘visible achievement'. Socially aware customers are usually in the highest socioeconomic group in the community and are keen to try new or different things. Visible achievement customers have personal recognition, high incomes and other tangible rewards such as travel, expensive homes and vehicles (www.roymorgan.com/.../ value segments). The Big Enough Small Enough positioning is key to meeting the needs of these customers. They all want security and convenience (big enough), and great service (small enough) (St George Strategic Brief, 2010). They will have a diverse spread of needs and life stages, and St George's segmentation model provides the ability to tailor products and service propositions to each value segment.
Customers in each segment view products differently. Mass market customers focus on basic features and reasonable fees met with a basic products such as a basic mortgage and credit card. Mass affluent customers want products with more advanced features such as portfolio loans and rewards credit cards (pers comm. 15 April 2010).
Ansoff's growth matrix (MM U6 2010) defines the options for an organisation to grow. As the size of the Australian market is limited, St George is seeking to grow market share through new products for existing markets and selling more of its existing products in existing markets. They have developed different marketing approaches by segment, including bundling products together differently and servicing the customer's needs differently (eg dedicated call centre with people answering vs generic call centre with machine directing calls). The differentiation has been carried through to how the business is set up, promoting focus on each segment and further differentiating product offerings and service models (pers comm. 2 March 2010).
Issue 5: Critique
Most successful companies use more than one philosophical approach to developing marketing activities (MM U1 2010). St George is using marketing and product orientations, with marketing the predominate orientation. This is evidenced through the push for all employees of the bank to put the customer at the centre of everything that they do, the continuous testing of new campaign ideas, and the drive to delight the customer with each interaction. Employee objectives from the managing director down are set and measured with at least a 30% weighting on customers to create this focus at all levels (pers comm. 21 April 2010). They extensively test each new idea and campaign through development, even dropping a completed TV ad because research indicated that it was not favourable (pers comm. 15 April 2010).
St George's dual marketing orientation of marketing and product is reasonable considering both the banking industry and its position as part of the Westpac group. There is a need to maintain a marketing focus and improve their brand consideration, as well as differentiate themselves from the Westpac brand and its offering (pers comm. 15 April 2010). The marketing orientation works towards improving brand consideration as well as providing a differential service proposition to the market that is better than any bank in the market based on customer advocacy scores (Net Promoter Score Report, February 2010). The product orientation backs this up through providing products that meet the needs identified in the market research. An example is a recently launched product to help our customers save more – St George Sense (www.stgeorge.com.au/... /sense-accounts.asp).
The five C's are effectively analysed and monitored through external and internal reporting to General Managers and their reports (pers comm. 15 April 2010). Company weaknesses identified through customer research are being addressed through advertising specific products (eg BT Super for Life) and promoting the extent of the ATM network (pers comm. 15 April 2010). St George is also opening new branches around Australia with four opening in the last 3 months (pers comm. 16 April 2010). Customer attributes were used to inform the segmentation strategy and each segment is organisationally supported with a team focussed on maintaining the particular value proposition and growing overall market share. Collaborators, particularly brokers are leveraged to sell St George products to non bank customers. Strategically, they could be further used to gain further market share in markets where St George does not have a large presence. This should then be followed up by branch expansion in those same areas. Competitively, St George has an opportunity to increase both the number of customers and the number of products that those customers hold (St George Internal Strategic Fact Book). This can be achieved through changing customer perceptions of their weaknesses and leveraging the market positioning of Big Enough Small Enough. Contextual factors are monitored by St George, Group Legal and Product. The bank is aware of changing legislation and actively lobby government bodies through the Australian Bankers Association and directly.
St George collects information on the two key metrics of customer advocacy and brand consideration weekly. These reports form parts of executive reporting and allow decisions to be made and tracked on a regular basis. This information is used to update different parts of their offering to the market, including branch advertising, communications releases and future campaigns (pers comm. 15 April). This teamed with the importance placed on customer research indicates that the culture of St George is conducive to evaluating and making changes as required, displaying the nimbleness of a small bank (small enough).
The St George brand is valued within the organisation and utilised well. Even after the takeover by Westpac, St George is still considered a stand alone brand in the marketplace. This is evidenced by St George winning industry awards (Money Magazine Home Lender of the Year 2009, AFR Smart Investor Bank of the Year 2009) (http://www.stgeorge.com.au/ .../awards.asp). The challenge for St George is translate the strong brand into a customer or brand experience. This is a current focus, with the Brand Promise and Brand Delivery creating that Brand Experience (Big Enough. Small Enough February 2010).
+ Brand Delivery
= Brand Experience
* Big Enough. Small Enough
* Personalised Service
* Wide Range of Services
* Knowledgeable staff
* Good choice of products
* Innovative services
* St George advocates
St George recognise a need to carefully use Happy the Dragon to promote the quirkiness of the brand (pers comm. 15 April). No other bank in Australia has a single mascot and Happy could be used to build the brand profile in areas that St George doesn't have significant market penetration.
Some segments of a market are more profitable than others and segmentation can help an organisation identify and pursue the most important customers (MM U5 2010). St George's segmentation of the retail market has created three large segments. There is an opportunity for St George to break down each segment further and make specific offers geographically, with customers in more affluent areas interested in housing and investment loan packages and other professional investment packages, and those in the mortgage belt of each city more interested in housing loan packages (St George Internal Strategic Fact Book 2010). There is also an opportunity to marry the segmentation with buyer behaviour and look to outside sources of information such as council development approvals or auction information to target specific offers on housing loans and personal loans.
Marketing Management, 2010, Units 1-6, AGSM MBA (Exec)
St George Bank Limited and its controlled entities Annual Report, 30 September 2009
Investing in a stronger future, St George Internal Document, Gavan Thompson, February 2010
Big Enough. Small Enough. St George Brand Strategy FY10, St George Internal Document, Martin Wise, February 2010
St George Strategic Brief, St George Internal Document, Brand and Marketing, 9 July 2009
St George Internal Strategic Fact Book, St George Internal Document, Group Strategy, February 2010
Email Communication, Gail Kelly, CEO, 1 October 2009
Personal Communication, Sivea Pascale, Head of Corporate Banking, Brand and Marketing, 15 April 2010
Personal Communication, Steven Wood, Senior Manager Property Coordination, Network Operations, 16 April 2010
Personal Communication, Nick O'Rielly, Head of Mass Affluent, 2 March 2010
Personal Communication, Colin Hamilton, Head of HR Support Functions, 21 April 2010
Australian Bankers Association, Accessibility of Banking
Net Promoter Score Report, Roy Morgan Research, February 2010
Banking Act of Australia, Commonwealth of Australia, Act No. 6 1959