Academy of Marketing International Conference On Brand Management, Birmingham, UK 2008

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Building B2B banking brand equity where it matters most: A risk and return framework. Presented at the Academy of Marketing

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Academy of Marketing International Conference On Brand Management, Birmingham, UK 2008

  1. 1. THOUGHT LEADERS INTERNATIONAL CONFERENCE ON BRAND MANAGEMENT 2008<br />Building B2B Banking Brand Equity where it Matters Most:<br />A Risk and Return Framework<br />Guy Pearce and Sameer Jooma<br />
  2. 2. Background<br />The Study<br />Practitioners<br />Customer Strategy Division<br />Standard Bank<br />Largest in Africa, represented in 18 African countries and 21 countries outside of Africa <br />Highest share of the Business Banking market in South Africa<br />The study arose in response to a business question concerning how we know whether branding and marketing are delivering value<br />
  3. 3. The Theory: From Brand to Value<br />Based on <br />Stahl, Matzler and Hinterhuber (2003:275)<br />Kumar, Lemon & Parasuraman (2006:89)<br />Rust, Zeithaml and Lemon (2004:117) <br />Leone et al (2006:131)<br />Ambler et al(2002:15)<br />Ambler (2005:12)<br />Piercy(2006:13)<br />Marks(2007:12)<br />Read(2007:1-2)<br />Ambler (n.d.)<br /><ul><li>“Brand equity is a ‘reservoir of unrealised cash flow’”
  4. 4. “Build brand equity, and then allow brand equity to build sales and profits”
  5. 5. “Brands are the ‘bait’ that attracts customers from whom value is extracted”
  6. 6. “There are no customers without brands. There are no brands without customers”</li></ul>The “brand value chain” was proposed to better understand the financial impact of brand marketing expenditures and investments<br />
  7. 7. The Research Question<br />Given the brand value chain, can areas of sub-optimal risk and return be identified in the B2B customer portfolio that, in turn, can help optimise brand spending?<br />If the answer is YES, the potential exists that there may be positive implications for the optimisation of brand spend<br />
  8. 8. Reduced Marketing Spend<br />Grow<br />Acquire<br />Unfair Share of Mind<br />Portfolio View of Brand Outcomes <br />Managing the Brand <br />Strong Corporate Identity<br />Bond (RM and Media)<br />Retain<br />Increased Ability to Manage Risk<br />Increased Company Value<br />Based on<br />Ryals (2006:104)<br />Reilly and Brown (2003:211, 248)<br />Bank customers can be viewed as portfolios of cash flow generating assets. Portfolio theory requires an explicit consideration of risk<br />
  9. 9. Expected Outcome<br />Because of these activities...<br />...we expected this outcome:<br />Essentially homogeneous branding<br />Essentially homogeneous relationship management<br />Essentially homogeneous brand treatment of customers leading to essentially homogeneous performance along the risk-return continuum<br />We were hoping to find outliers suggesting that the homogeneous branding activities did not necessarily result in homogeneous performance<br />
  10. 10. 100%<br />90%<br />80%<br />70%<br />60%<br />3 year CAGR<br />50%<br />40%<br />30%<br />20%<br />10%<br />10%<br />20%<br />30%<br />40%<br />50%<br />60%<br />70%<br />RSD<br />Findings: The Premium BB Segment<br />Foreign Governments 197<br />Air Transport and Transport Supporting Activities 112<br />Hotels and Restaurants 885<br />Food, Beverages and Tobacco Products 400<br />Post and Telecommunications 125<br />Manufacture of Other Wood Products 297<br />CAGR (%) = 147.11 * RSD – 9.33 r2 = 0.84, Durbin Watson d = 2.73<br />
  11. 11. Key Statistics<br />Value<br />SE<br />Lower 95%<br />Upper 95%<br />r²<br />t<br />147.11%<br />12.45%<br />121.6%<br />172.7% <br />11.82<br />Slope<br />9.33%<br />4.55%<br />18.67%<br />0.00%<br />2.05<br />Intercept<br />-<br />-<br />-<br />Regression<br />7.00%<br />0.84<br />Durbin Watson <br />2.73<br />N<br />Industry<br />E(<br />CAGR<br />)<br />CAGR<br />t<br />P<br />112<br />Air transport and transport supporting <br />activities<br />(B)<br />56.6%<br />73.1%<br />2.36<br />0.01 <br />125<br />Post and telecommunication<br />(A)<br />67.1%<br />44.<br />4%<br />3.24<br />0.00 <br />297<br />Manufacture other wood products<br />(C)<br />47.5%<br />44.3%<br />0.44 <br />0.33 <br />400<br />Food, beverages and tobacco products<br />(E)<br />39.3%<br />46.6%<br />1.05 <br />0.15 <br />885<br />Hotels And Restaurants<br />(D)<br />51.5%<br />62.4%<br />1.55<br />0.06 <br />
  12. 12. Limitations and Conclusion<br /><ul><li>Some risk-return inconsistency identifies potential industrial brand equity gaps in B2B banking, opening up an opportunity for targeted branding initiatives
  13. 13. While the methodology can be generalised, the results apply only to the premium segment of the South African Business Banking market at a particular point in time
  14. 14. Macro industry volatility needs to be taken into account during decision-making
  15. 15. Is a useful business tool because it can test and track industry-level strategy efficacy and performance</li></ul>Further study is being conducted across the other Business Banking segments<br />

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