Marketing Concepts and Applications on HSBC Bank

This report provides a theoretical conceptualization of major marketing concepts and their related applications on HSBC bank. It investigates major topics of product/market orientation, company values proposition and differentiation, customer needs, wants and demands, factors that influence buying behavior and nature and level of competition.

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Abstract
This report provides a theoretical conceptualization of major marketing concepts and their
related applications on HSBC bank. It investigates major topics of product/market orientation,
company values proposition and differentiation, customer needs, wants and demands, factors that
influence buying behavior and nature and level of competition.

Table of Contents
Introduction....................................................................................................................................5
First: Product/market orientation................................................................................................5
1.1 Market orientation..................................................................................................................5
1.2 Services growth......................................................................................................................5
1.3 Strategic marketing initiative (SMI)......................................................................................6
1.4 HSBC product/market orientation.........................................................................................6
Second: Company values proposition and differentiation.........................................................6
2.1 Organizational efforts towards values proposition and differentiation..................................7
2.2 Segmentation, targeting, positioning in the Marketing strategy of HSBC Bank...................8
Third: Customer needs, wants and demands..............................................................................8
3.1 Factors that influence customer satisfaction:.........................................................................9
3.2 HSBC customer orientation...................................................................................................9
Forth: Factors that influence buying behavior.........................................................................9
4.1 Consumer theory..................................................................................................................10
4.2 HSBC response to the changing buying behavior...............................................................11
Fifth: Nature and level of competition.......................................................................................11
5.1 Changing competition in the financial sector......................................................................11
5.2 Competition at HSBC..........................................................................................................12
5.3 Transparency of business.....................................................................................................12
5.4 Industry competitors............................................................................................................12
Conclusions...................................................................................................................................13
References.....................................................................................................................................14

Introduction
There are many challenges that exist in the financial markets and influence the banks' attitude
towards its customers. Business diversification, market concentration/competition and the level
of economic growth influence banks profitability in local markets (Petria, Capraru & Ihnatov
2015).
This report provides an analysis of principle marketing concepts and their application on HSBC
Holdings. HSBC is a multinational bank, headquartered in the UK. It is considered the world's
second-largest bank. It mainly operates in commercial global investment and retail banking
(HSBC Holdings plc 2018).
First: Product/market orientation
1.1 Market orientation
Organizations, including banks that implement the marketing concept are considered market-
oriented. Then they get involved in the activities of disseminating customer related market
intelligence to achieve market value and customer satisfaction (Joachim, Omotayo & Omotayo
2011).
1.2 Services growth
The product-market growth matrix was created by Ansoff (1957) and developed by Pleshko and
Heiens (2008), as cited in Heiens & Pleshko (2011), who argued that market growth strategies
initiated by organizations focus on current market segments, new segments or both of them.
They added that service strategies initiated by organizations could focus on existing services,

adding new services or both of them. The services focus considers their consistency and
homogeneity.
1.3 Strategic marketing initiative (SMI)
Banks could achieve the advantages of the first mover according to Berger and Dick (2007), as
cited in Heiens & Pleshko (2011). They argued that the earlier the bank moves to enter the
market, the larger the market share it can gain compared to other banks. Strategic Marketing
Initiative (SMI) refers to the introduction of new products or services, new promotional
campaign, changes in pricing, implementing new distribution ideas, adopting new technology
and penetrating new markets.
Noble (2002), as cited in Heiens & Pleshko (2011), argues that strategic market orientation offers
principle guidance that influences the organization's marketing and strategy introduced activities.
Organizations guided by their strategic orientations invest in research and development, acquire
new technology and market information.
1.4 HSBC product/market orientation
HSBC bank has more than 150 years of experience fulfilling customers' financial needs by
serving 47 million customers in more than 70 countries (Bhasin 2019). HSBC performance
measures reveal high profits after tax of $4.1bn that reflects higher revenues. The revenue
increased in markets products, investments and insurance mainly in the Asian market (HSBC
Holdings plc 2018).

Second: Company values proposition and differentiation
The rapidly changing global conditions enforce organizations to adjust their offerings according
to the environmental changes and customer needs. Financial services grow constantly. Bank
marketing refers to the management activities directed towards the profitability of the banking
services to its customers (Blackburn 2012).
2.1 Organizational efforts towards values proposition and differentiation
Organizational efforts towards segmentation, targeting, positioning, demography, profitability
and geography are discussed according to Goyat (2011) and Schlegelmilch (2016), as follows:
 Segmentation: It is linked directly with customers that require it to be dynamic. According to
Schiffman and Kanuk (1994), as cited in Theofanides & Livas (2012), there are eight ways
bases for services marketing that organizations can use to segment the market; demographic,
geographic, psychographic, sociocultural, user-related, use-situational, benefit and hybrid
segmentation. However, banks will face problems in retaining customers due to their changing
lifestyle, age, culture and access to multiple financial channels.
 Targeting: It takes place within one or many countries while targeting different groups
according to their segments. Customer groups should be first identified to consider the segment
size, its potential growth, the level of competition that exists within it and its compatibility with
the organizational objectives. It is recommended that organizations target the segment where
customers are loyal and recommend the product to their family and friends.
 Positioning: It refers to the location of the product or service in the customers' minds as a
brand and idea. That is why it cannot be fully controlled by organizations; they tend to

establish a frame that signals to the customer the value he can get from the product or service.
Positioning may drive segmentation and targeting of the company if it brings new ideas.
 Demography: The demographic characteristics have a significant role in crafting the
organization value position. They include the customer gender, age, social strata, education,
religion, race and nationality.
 Profitability: The competitive environment of today requires organizations to deliver high-
quality products and services to differentiate their brands from their competitors. Also,
customer satisfaction directly affects the organization's profitability by contributing to its
success.
 Geography: It divides the markets according to their geographic positionings, like countries,
regions or districts. In the global context, markets are segmented according to the countries.
2.2 Segmentation, targeting, positioning in the Marketing strategy of HSBC Bank
Being a global bank, HSBC strategy depends on a mix of demographic and geographic
segmentation in offering its products and services to individuals and corporates. It utilizes the
differentiation targeting strategy to satisfy the investment and saving interests of the customers.
Also, it depends on the value-based positioning strategy to bridge between different customer
segments across the globe. HSBC mission is to enable customer, businesses and communities to
prosper through helping people to achieve their dreams and ambition (Bhasin 2019).
Third: Customer needs, wants and demands
Many research have indicated the importance of customer satisfaction and its positive relation
with loyalty, repeat purchasing and retention and profitability. Satisfied customers tend to share
their experiences with others, unlike the dissatisfied customers who spread the bad experience to

the maximum number of people they can reach. Service quality is an important factor in
customer satisfaction that organizations devote much care to it. Hansemark and Albinson (2004),
as cited in Angelova & Zekiri (2011), assume that satisfaction is reflected in the customer overall
attitude towards the organization that provides the service or it is a reflection to the gap between
customer expectations and the service they actually receive. The customer satisfaction index
(CSI) represents a measurement of how organizations satisfy customer needs. It can be used to
compare services introduced within the same industry
3.1 Factors that influence customer satisfaction:
There are many factors that could lead to customer satisfaction, including the friendly attitude of
the staff, their willingness to solve problems and offer help, the accuracy of billing, the
competitiveness of prices, quality of service, value creation and service quality. Moreover,
customer satisfaction results in their high trust in the provided products and services. Hence,
building customer relationship is essential for all organization and for service organizations,
including banks as well (Osisioma & Nzewi 2016).
3.2 HSBC customer orientation
HSBC aims to become the world's leading international bank by introducing excellent services to
its customers. It manages to understand customer needs across the globe. Also, it takes
responsibility for the services it provides by operating according to the highest standards that
guarantee long term success (HSBC Holdings plc 2017b).
According to HSCB (2015), the changing demographics and customer demand bring new
opportunities to business agility and pose threats to the established marketing strategies. The

major features of the changing customer demand are reflected through the rapid increase in the
customers with middle income, especially in the emerging markets and the advances in the
digital technologies, the existence of different generations that represent various patterns of
consumption and the rising women share in the workforce.
Forth: Factors that influence buying behavior
The process of buying starts with recognizing the need or the problem that requires to be solved.
Then, the buyer moves to the next step of searching for information, if he could find it, the
purchasing decision is made (Asamoah 2012).
4.1 Consumer theory
Successful organizations should make all efforts to satisfy customer needs. Kotler and
Armstrong (2013), as cited in Fejza, Livoreka & Bajrami (2017), argue that the purchasing
consumer's behavior to is the end behavior of the customer whether he is an individual or
household that shape the consumer market. They add that customer behavior is influenced by
culture, social or interpersonal and personal factors. They are discussed according to Rani
(2014), (Saad, Ishak & Johari (2013) and Abideen & Saleem (2011) as follows:
 Cultural factors: Are influenced by subcultures and social classes. Consumers are part of the
society where culture has a great influence on their buying behavior. Cultural trend is the trend
which is widely followed by people that also comply with their social class.
 Social factors: Are influenced by groups, social roles, household and statuses. Social classes
that involve special and distinctive characteristics associated with each class. Customers of
lower classes are more influenced by prices, while the upper classes are more attracted to the
brand, quality and innovative features.

 Personal factors: Are influenced by demographic and the degree to which consumer is
involved in the purchasing process of products or services. They include the buyer age,
lifestyle, hobbies, occupation, economic situation and habits. Also, the buyer personality and
self-concept highly influence his buying decision
 Psychological factors: They affect the purchase decision motivation, learning, perception,
attitudes and beliefs.
4.2 HSBC response to the changing buying behavior
HSBC leasers take the ultimate responsibility towards ensuring the customer service standards
according to specific metrics to be able to respond effectively to their changing behavior;
measuring the buyer feeling about recommending HSBC the speed and quality of handling
customer complaints (HSBC Holdings plc 2017b)
Fifth: Nature and level of competition
5.1 Changing competition in the financial sector
Competition and stability in the financial sector control the level of risk that exists in the
financial markets. Greater competition acts as an external force that banks should consider in
order to be able to differentiate their products and services and leapfrog their competitors.
Competition is a major driver for innovation that results in a high variety of products and
services with lower prices and larger access to finance and better service quality (Martin 2016).
Since the 1980s, competition has been considered a threat to stability, the matter that represented
a reason for potential bank failure. Recent research illustrates that competition is good for banks'

portfolio risk. Higher profits lead banks to limit their risk exposure to avoid failure and gain
profits (OECD 2010).
5.2 Competition at HSBC
Technology challenge: The constant advances in digital technology, increasing services
introduced through the smartphones and internet represent major challenges that face banks
today. The consumer behavior of online shopping enforces banks to deliver online banking
services with high security assured to satisfy the changing customer needs.
5.3 Transparency of business
The wide access of buyers to information facilitates taking the buying decision. Consumers have
all available means to access financial services information of every service provider and select
the best alternative for him. For example, HSBC reported an increasing demand for green
consumerism in Asia From the side of the wealthier consumers who seek to differentiate
themselves form through improved consumption (HSBC Holdings plc 2017a).
5.4 Industry competitors
The banking industry in which HSBC operates witnesses an increasing dynamic competition
among banks. HSBC is enforced to implement new strategies due to the waves of mergers and
acquisitions that the industry witnessed around the world. HSBC is among the major players in
the industry who strives for taking the leadership position, where the industry competition is very
aggressive because of the following factors:

 Potential entrants: They need to have capital investments, technology and human resources to
succeed in entering the industry.
 Buyers: The banking history witnessed many improvements in the level and competence of the
offered services to the customers accompanied by customer access to information which made
buyers behaviors major controller of the global banking industry. HSBC provides equal access
to financial services across the globe.
 Suppliers: Represent the technology providers that the bank uses. The suppliers of hard and
soft technologies significantly affect the HSBC through their tools of trade.
 HSBC adopts IT developments and uses information systems to manage its affiliates and
customers across the globe.
 Substitutes: There exist a high level of substitutes for HSBC in the banking industry.
Although, HSBC has established its financial disclosure policy to ensure transparency and
differentiation of its services from its substitutes.
Conclusions
Strategic market orientation offers principle guidance that influences the organization's
marketing and strategy introduced activities. Being a global bank, HSBC strategy depends on a
mix of demographic and geographic segmentation in offering its products and services to
individuals and corporates.
There are many factors that could lead to customer satisfaction, including the friendly attitude of
the staff, their willingness to solve problems and offer help, the accuracy of billing, the
competitiveness of prices, quality of service, value creation and service quality. HSBC aims to
become the world's leading international bank by introducing excellent services to its customers.
It manages to understand customer needs across the globe. HSBC leasers take the ultimate

responsibility towards ensuring the customer service standards according to specific metrics to
be able to respond effectively to their changing behavior.

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