Dissertation Writing Help- Project Report on International Marketing Strategy in Retail Banking Industry
Case Study of ICICI Bank in Canada- International Marketing Strategy in Retail Banking Industry
Case Study of ICICI Bank in Canada- International Marketing Strategy in Retail Banking Industry
INTRODUCTION
In the context of retail banking, customer satisfaction has been found to be the ultimate measure of service performance. Once customer satisfaction has been created, loyalty is often formed, which in turn enhances firm profitability. Over the past few decades, retail banks have faced an increasingly dynamic environment that has heightened standards for attaining customer satisfaction, making it difficult to sustain growth in the existing marketplace. In response, banks could choose to diversify into new product lines or expand into new markets. Since customers, however, believe that product offerings across banks are similar, the option of product diversification would likely be an inefficient strategy. Many retail banks, therefore, may choose to expand into new international markets.
A retail bank considering international expansion faces several obstacles including a lack of cultural awareness and understanding of the market, and language differences that may hinder effective communication.
One strategy retail banks could adopt to overcome these obstacles is to target home country customers in the foreign market. Although revenue can be enhanced by targeting similar markets, careful analysis suggests that similarity alone is not sufficient to ensure success. Customer needs are a function of their socio-economic status, culture, and the environment of the country in which they are residing.
Since these elements are continuously changing, it will be necessary to adapt certain elements of the retail banking marketing mix in order to create a more localised approach. By employing a case study of ICICI Bank Canada, this research illustrates how an international bank that targets home country nationals in a foreign market can successfully adapt its marketing mix. In doing so, this research seeks to answer the following questions: When a retail bank targets home country nationals in a foreign market, which of the marketing mix variables are customised? Of the variables that have been customised, why have the adaptations been made?
The paper is organised as follows: first, an overview of the retail banking environment in North America and new opportunities arising in Canada are discussed. Then, a literature review develops a conceptual framework of marketing in the retail bank industry. Next, the research methodology is described and results of the data analysis are presented. Finally, implications for managers and future research are identified.
THE CHANGING NATURE OF THE RETAIL BANKING INDUSTRY
Over the past two decades, retail banking institutions in North America have been facing an increasingly competitive and dynamic business environment. First, there has been a reduction in government regulation creating a hybrid industry structure. Second, new technologies, in particular the internet, have facilitated the entry of foreign banks into new markets irrespective of physical presence. And finally, consumers are now more informed, face lower switching costs, and are showcasing an ever increasing set of diverse needs.
The combination of these various forces has escalated the competitive forces faced by retail banks. In order to sustain sales growth, banks could diversify into new products or expand into new international markets. Customers have been found, however, to perceive little difference between banks in terms of product offerings, making product diversification less attractive. Banks therefore may pursue the second alternative, and in fact, it is common to see international expansion as an opportunity to increase sales of existing products.
When expanding into new geographic markets, a retail bank needs to ensure that it is knowledgeable of the target market so as to cater to customers ’ needs appropriately. Gaining knowledge of an international market, however, requires a greater investment. This is because the firm lacks competence with the foreign market due to the unfamiliar culture, buyer loyalties to other service providers may already exist, language differences may hinder effective communication despite translation techniques, and extensive resources such as management capacity and capital will be required to be firmly established. To mitigate the risks, firms may choose to target markets similar to their home country ’ s market.
Research suggests that market similarity, defined as the degree of resemblance between a foreign market and a firm’ s home market, could be a vital criterion for market selection. Banks may choose to target similar markets because the similarity creates an opportunity to standardise some elements of the marketing strategy and share knowledge between subsidiary and parent.
Demand for a product will tend to be greatest in countries with markets similar to that for which the product was originally developed and greater brand awareness may exist. Although revenue can be enhanced by targeting similar markets, a careful evaluation suggests that this alone can be misleading; only considering potential cash flows may mislead firms into standardising their marketing strategy. Excessive centralisation of marketing decision making at the parent and failure to adapt marketing strategy to subsidiary market conditions has been found to contribute to poor performance of subsidiaries.
The Canadian opportunity
The Canadian marketplace is changing. Census data reveal that the visible minority population is growing faster than the total population; between 1996 and 2001, the total population increased by 4 per cent while the visible minority population rose 25 per cent. It is estimated that by the year 2017, visible minorities will account for between 19 and 23 per cent of the country ’ s population. The visible minority population consists mainly of three segments: immigrants successfully settled in Canada, immigrants that have arrived recently and immigrants that are still in their homeland and are in the process of relocating to Canada. The latter two segments have been found to have special banking needs largely unfulfilled by traditional bank offerings.
Researchers have found three primary stages through which a typical immigrant proceeds in order to adapt to his / her new country. The first two years of the stay is phase one, and the immigrant ’ s major preoccupation is finding a job, maintaining contact with family members back home, and sending money to relatives back home. During this phase, immigrants ’ banking needs are typically focused on financial remittance. Phase two begins in the following three or four years. If things are going well, the immigrant will apply for consumer loans to purchase a residence, and will get used to having an account and a credit card. In Phase Three and onwards, the immigrant requires the full range of fi nancial products and services that a retail bank normally offers.
Domestic banks usually do not recognise the international credit history of new immigrants. This lack of a credit history prevents immigrants from accessing personal credit, which in turn inhibits their ability to integrate into Canadian society. Without a credit history, immigrants are unable to obtain a credit card, a mortgage, and educate themselves in order to obtain the appropriate certification for suitable employment. This situation creates a vicious circle, wherein the immigrant needs employment to develop a credit history, credit history to obtain a loan, a loan to enrol in studies, and studies to gain employment. Without a credit history, immigrants are also unable to obtain a loan to establish a business. Further, it is likely that domestic banks may lack an understanding of immigrants ’ cultural values, may not be present in immigrant communities, and may not have personnel capable of conversing in the language with which the new immigrant is most comfortable.
Source- International marketing strategy in the retail banking industry: The case of ICICI Bank in Canada written by Leighann C. Neilson and Megha Chadha is taken from Journal of Financial Services Marketing Vol. 13, 3 204–220.
