This document summarizes a study conducted by Standard Bank on optimizing brand spending for their business-to-business banking customers. The study developed a "brand value chain" model to understand how brand marketing expenditures impact financial returns. By analyzing customer data across industries, the study found inconsistencies between expected risk and returns for some industry segments. This suggests opportunities to better target branding initiatives. The findings provide a tool to evaluate industry-level strategy effectiveness and optimize brand spending across customer segments. However, the results are specific to one bank and time period. Further analysis of other customer segments is ongoing.
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Academy of Marketing International Conference On Brand Management, Birmingham, UK 2008
1. 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
2. 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
5. “Brands are the ‘bait’ that attracts customers from whom value is extracted”
6. “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
7. 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
8. 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
9. 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
10. 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
11. Key Statistics Value SE Lower 95% Upper 95% r² 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
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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
15. Is a useful business tool because it can test and track industry-level strategy efficacy and performanceFurther study is being conducted across the other Business Banking segments