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

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

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

    • THOUGHT LEADERS INTERNATIONAL CONFERENCE ON BRAND MANAGEMENT 2008
      Building B2B Banking Brand Equity where it Matters Most:
      A Risk and Return Framework
      Guy Pearce and Sameer Jooma
    • Background
      The Study
      Practitioners
      Customer Strategy Division
      Standard Bank
      Largest in Africa, represented in 18 African countries and 21 countries outside of Africa
      Highest share of the Business Banking market in South Africa
      The study arose in response to a business question concerning how we know whether branding and marketing are delivering value
    • The Theory: From Brand to Value
      Based on
      Stahl, Matzler and Hinterhuber (2003:275)
      Kumar, Lemon & Parasuraman (2006:89)
      Rust, Zeithaml and Lemon (2004:117)
      Leone et al (2006:131)
      Ambler et al(2002:15)
      Ambler (2005:12)
      Piercy(2006:13)
      Marks(2007:12)
      Read(2007:1-2)
      Ambler (n.d.)
      • “Brand equity is a ‘reservoir of unrealised cash flow’”
      • “Build brand equity, and then allow brand equity to build sales and profits”
      • “Brands are the ‘bait’ that attracts customers from whom value is extracted”
      • “There are no customers without brands. There are no brands without customers”
      The “brand value chain” was proposed to better understand the financial impact of brand marketing expenditures and investments
    • The Research Question
      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?
      If the answer is YES, the potential exists that there may be positive implications for the optimisation of brand spend
    • Reduced Marketing Spend
      Grow
      Acquire
      Unfair Share of Mind
      Portfolio View of Brand Outcomes
      Managing the Brand
      Strong Corporate Identity
      Bond (RM and Media)
      Retain
      Increased Ability to Manage Risk
      Increased Company Value
      Based on
      Ryals (2006:104)
      Reilly and Brown (2003:211, 248)
      Bank customers can be viewed as portfolios of cash flow generating assets. Portfolio theory requires an explicit consideration of risk
    • Expected Outcome
      Because of these activities...
      ...we expected this outcome:
      Essentially homogeneous branding
      Essentially homogeneous relationship management
      Essentially homogeneous brand treatment of customers leading to essentially homogeneous performance along the risk-return continuum
      We were hoping to find outliers suggesting that the homogeneous branding activities did not necessarily result in homogeneous performance
    • 100%
      90%
      80%
      70%
      60%
      3 year CAGR
      50%
      40%
      30%
      20%
      10%
      10%
      20%
      30%
      40%
      50%
      60%
      70%
      RSD
      Findings: The Premium BB Segment
      Foreign Governments 197
      Air Transport and Transport Supporting Activities 112
      Hotels and Restaurants 885
      Food, Beverages and Tobacco Products 400
      Post and Telecommunications 125
      Manufacture of Other Wood Products 297
      CAGR (%) = 147.11 * RSD – 9.33 r2 = 0.84, Durbin Watson d = 2.73
    • Key Statistics
      Value
      SE
      Lower 95%
      Upper 95%

      t
      147.11%
      12.45%
      121.6%
      172.7%
      11.82
      Slope
      9.33%
      4.55%
      18.67%
      0.00%
      2.05
      Intercept
      -
      -
      -
      Regression
      7.00%
      0.84
      Durbin Watson
      2.73
      N
      Industry
      E(
      CAGR
      )
      CAGR
      t
      P
      112
      Air transport and transport supporting
      activities
      (B)
      56.6%
      73.1%
      2.36
      0.01
      125
      Post and telecommunication
      (A)
      67.1%
      44.
      4%
      3.24
      0.00
      297
      Manufacture other wood products
      (C)
      47.5%
      44.3%
      0.44
      0.33
      400
      Food, beverages and tobacco products
      (E)
      39.3%
      46.6%
      1.05
      0.15
      885
      Hotels And Restaurants
      (D)
      51.5%
      62.4%
      1.55
      0.06
    • Limitations and Conclusion
      • Some risk-return inconsistency identifies potential industrial brand equity gaps in B2B banking, opening up an opportunity for targeted branding initiatives
      • 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
      • Macro industry volatility needs to be taken into account during decision-making
      • Is a useful business tool because it can test and track industry-level strategy efficacy and performance
      Further study is being conducted across the other Business Banking segments