BSMAN 3008 Hong Leong Bank Marketing Strategy: Segmentation Report

This report provides a detailed analysis of Hong Leong Bank's marketing strategies, focusing on segmentation, targeting, and positioning. It begins with a company overview, highlighting Hong Leong Bank's history and its evolution into one of Malaysia's largest banking groups with regional presence. The report examines the bank's product and market orientation, detailing its diverse range of products across personal, priority, business, and global markets, with a specific focus on personal loans. It further explores the company's value proposition and differentiation strategies, emphasizing the unique benefits offered to customers. The report also discusses customer needs, wants, and demands in relation to personal loans, along with the demographic, geographic, and psychographic segmentation strategies employed by the bank. A perceptual map illustrates the bank's positioning strategy, and factors influencing consumer behavior are examined. Finally, the report assesses the nature and level of competition faced by Hong Leong Bank in the Malaysian banking sector.

Running head: MARKETING FOR MANAGERS
Marketing for Managers
Name of the Student:
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Author Note:

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Executive Summary:
The aim of the report is to provide an overview of marketing in the perspective of
banking institution of Hong Leong Bank of Malaysia and its products. The bank is one of the
largest in Malaysia and offers various products and services. The report commences with a
company a company overview along with a description of the products offered. The report also
discusses about the company orientation along with an insight to the value proposition and
differentiation undertaken by the company in terms of the product. There are also discussions
about the consumers’ wants, needs and demands. The report also discusses about segmentation
and targeting and describes the positioning strategy through a perpetual map. The report also
puts forward various factors influencing the consumer behavior along with a portrayal of the
nature and the level of the competition.

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Table of Contents
1.0 Introduction:..............................................................................................................................3
2.0 Company Overview:..................................................................................................................3
3.0 Product/Market Orientation.......................................................................................................4
3.1 Product Range Offered:.........................................................................................................4
3.2 Company Orientation:............................................................................................................5
4.0 Company’s Value Proposition and Differentiation...................................................................6
5.0 Customers’ Needs, Wants and Demand....................................................................................6
6.0 Segmentation and Targeting......................................................................................................8
7.0 Positioning Strategy:................................................................................................................10
8.0 Factors Influencing Consumer Behavior:................................................................................11
9.0 Nature and Level of Competition:...........................................................................................11
10.0 Conclusion:............................................................................................................................12
References:....................................................................................................................................13

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1.0 Introduction:
The aim of the report is to provide an insight into marketing in the perspective of a
chosen banking institution and its various products. The banking institution chosen here is Hong
Leong Bank and the products relate to personal, priority, business and global markets (hlb.com,
2018). It represents a financial service company of Malaysia operating regionally and has its
presence felt in Hong Kong, Vietnam, Singapore, China and Cambodia. This bank is focused on
technology and emphasizes on the development of the financial capabilities for serving the
clients across these five geographies. The Hong Leong Bank (HLB) has its listing in the Bursa
Malaysia and is a part of Hong Leong Group. The bank has strong heritage of Malaysian
entrepreneurship with the headquarters in Kuala Lumpur. The report commences with a
company overview and goes on to discuss product or market orientation. The report also
discusses about the differentiation and the value proposition of the company along with a
discussion on the customer needs, wants and demand. The report also focuses on segmentation,
targeting, and the positioning strategy. The report also provides an insight into the factors
influencing the consumer behavior and the nature and the level of the competition.
2.0 Company Overview:
Hong Leong Bank was originally known as the Kwong Lee Mortgage and Remittance
company that later became known as the Kwong Lee Bank Limited in the year 1934 and is the
oldest and renowned financial institution of Malaysia (hlb.com, 2018). MUI group acquired the
Kwong Lee Bank in the year May 1982 which was known as Malayan United Bank (MUI)
Berhad in 1983. In the year 1989, it came to known as the MUI Bank. Under this banner, it grew
from close to 11 branches to 35 branches across the nation. In 1994, the MUI Bank Berhad was

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acquired by the Hong Leong Group and became renamed as the Hong Leong Bank Berhad. It
then merged with the EON Banking Group in the year 2011 that positioned the bank as the fifth
largest banking group having assets over close to RM180 billion. In the regional context, HLB
represented one of the first banks of Malaysia in the year 2008 for entering the Chinese banking
sector with close to 20 percent strategic holding in the Bank of Chengdu Co. Ltd. However, HLB
remains committed in embedding itself towards the communities where it operates for meeting
the customer needs. In the year, 2012, the bank reached out to the customers with communities
where it is able to operate via various channels (hlfg.com, 2018). This involved the distribution
network of close to 300 branches on a local scale including the sales and business centre of
Singapore, Malaysia, Vietnam, Cambodia and Hong Kong along with comprehensive range of
electronic and complementary channels including the self-service terminals. In the same year, the
bank also launched a sub brand that brought together the bricks and clicks that put forward range
of life starter services and products for meeting the needs of young community.
3.0 Product/Market Orientation
3.1 Product Range Offered: The Hong Leong Bank offers various products related to
personal banking, priority banking, business banking and products related to the global market
(hlb.com, 2018). The personal banking products includes personal loan, current and savings
account, credit cards, balance transfer, flexi payment plan, online fixed deposits, call for credit
plus and increase in the credit limit. The priority banking products includes the premium deposits
and the loans and financing. The business banking products mostly relates to the deposits suiting
every need of the business. It also includes banking and comprehensive schemes for the SME
(Small and Medium Sized Enterprises). The global markets include the Forex and the investment
products. The report discusses about the personal loan service put forward by HLB under the

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personal banking category. The personal loan of HLB comes with various features and benefits.
These include (hlb.com, 2018):
 Close to 20 percent cash back on the interest
 Faster approval within a period of 48 hours
 Income eligibility for the loan is RM 24,000 yearly
 Monthly installments close to RM 103
 Flexibility in the repayment tenure which is close to 7 years
 There is no requirement for guarantor and collateral
 Eligible for only Malaysian residents between the age group of 21 to 60 years of age
3.2 Company Orientation: Market orientation is defined as the form of the
organizational structure where employees’ remains committed in constantly creating superior
value or take up sequence of marketing activities that result in better performance (Urde,
Baumgarth & Merrilees, 2013). It is found that the market-oriented organizations have better
performance compared to the ones that remains less market oriented. The market-oriented
organizations focus more on adapting the products and services to the expectations and the needs
of the customers. Hong Leong Bank follows market orientation as it designs its products and
services according to needs and wants of the customers. In other words, the bank puts forward a
focused production by focusing primarily on the customers. Besides, HLB also have a
concentrated strategy where its functions remains aligned with its strategic vision for meeting the
needs of the customers. HLB also clearly communicates about how its products benefit the
customers thereby earning marketing advantages. In addition, the bank is also able to generate
long-term profitability by delivering and consistently understanding the wants of the market
place. In most of the cases, one-time buyers are transformed into the repeat customers with the

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final goal of turning them into loyal customers. This is because the loyal customers makes more
frequent purchases and in huge volumes and are less susceptible to the competition (Boso, Story,
& Cadogan, 2013). This shows how HLB have better ability of remaining successful and viable
in retaining its marketing concept.
4.0 Company’s Value Proposition and Differentiation
Value proposition refers to the business or the marketing statement that the company uses
for summarizing why the consumer should buy the product or use the service (Osterwalder et al.,
2014). The statement is used for convincing the potential customer that a specific service or
product will add value or better solve the problem than similar other offerings. The product
chosen here is the personal loan whose value proposition lies in offering an exclusive rate of 6
percent per annum when applied online. This helps in differentiating HLB from the banking
industry. Besides, the personal loan would be beneficial for the customers as it is applied
anytime, anywhere and allowed customers affordable installments for tenure of two to five years.
The fast approval of the loan also acts beneficial for the customers. People between the age of 21
to 60 years with an annual income of RM$24,000 have eligibility to apply for the loan.
5.0 Customers’ Needs, Wants and Demand
According to Kotler (2014), human need is the state of deprivation of certain basic
satisfaction. Individuals require clothing, food, shelter, safety, belonging and self-esteem. Such needs
do not emerge because of insistence of the society or the marketers. In fact, they persist in the texture
of the human condition and human biology.

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Wants refers to the desires for the specific satisfiers of the needs. People might have fewer
needs but their wants might be many (Roberts, Dant & Lim, 2015). They remain constantly shaped
and reshaped by the social forces and the institutions including schools, families, churches and the
business corporations.
On the other hand, demand refers to the wants for the specific products backed up the
willingness and the buying of buying them (Pearson, 2016). Companies should put across a
measurement considering not only the number of people wanting but also the number of people
expressing their willingness and actually buying the product.
Personal loans represent the ways of fulfilling the needs and the wants of the consumers and
are an excellent means for the borrowers in fulfilling the financial needs (Oliver, 2014). Personal
loans are taken for varied reasons like renovation of home, buying car, consolidation of the debts and
acquiring funds for the higher education of children. Hence, personal loans are useful for fulfilling all
the needs and the wants. Personal loans remains categorized as secured and unsecured. Depending on
the individual requirements, an individual might avail secured as well as unsecured personal loan.
Nevertheless, the demand for the personal loan within the banking sector has been steady irrespective
of the weaker economy of Malaysia. There have been rising levels of stress bubbling in that
particular space and it represented that only the loan segment continued to have double-digit growth.
Further, it was found that the gross impaired loans (GIL) in personal segment grew at 31.7 percent on
a yearly basis and accounted to close to RM 1.37billion. The growth pace of the personal loan has
been much faster than the mortgage and the credit card segments. In other words, the GIL growth
within the personal loan segment stood close to 15.1 percent in comparison to the 3.4 percent credit
cards and 5.6 percent mortgages.

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6.0 Segmentation and Targeting
Demographic as the basis of segmentation offers straightforward base for the purpose of
segmentation since they depend on the easier to access information and put forward
classifications that are easily interpretable , measurable and straightforward (Kahreh et al., 2014).
In the banking sector, demographic segmentation is based on the following:
Gender: Hong Leong Bank (HLB) initially targeted the men in comparison to women
since the woman were considered less confident with financial services.
Age: Financial institution like the Hong Leong Bank targets the schoolchildren who
have the propensity to save. HLB tries to teach the students the benefits of the savings through
special savings schemes. HLB also tries to target the university students as they always have a
shortage of cash and is in need of overdrafts, loans and special insurance. They also target the
first time workers and the adults due to their higher purchasing power. HLB also target the
ageing population as needs for financial service changes varies due to change in the services and
the income of the people.
Geographic: Financial institutions as the Hong Leong Bank undertakes this type of
segmentation based on (Berger et al., 2016):
 Regional segmentation which includes countries, cities and regions
 Size of the population which includes under 14.000, 14.001 -41.000, over 41.000
 Density of the segmentation which includes urban, rural and suburban
Psychographic: Banking institutions like HLB undertake this type of segmentation based
on the beliefs, attitudes, preferences, personality, interest and knowledge. For instance, two

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individuals belonging to the same age might exhibit varied purchasing behavior based on the
financial services because of the difference in knowledge, interest and attitude.
Behavioral: Financial institutions as HLB undertakes this type of market segmentation
based on the discriminatory power put forward by the social class. The aspirations of the various
social classes are as follows (Agénor & Montiel, 2015):
 Lower social classes have an aspiration for spending while higher social class
have savings aspirations
 Lower social class favors easily understandable financial services while the
higher social class favors complex financial service
 Lower social class favor bank accounts accompanied by the tangible evidence
while higher social class take up riskier investments
 Lower social class favor investment easily converted to cash while the other
group favors long-term investment with higher profits.
Targeting Strategy of the Bank
A financial institution as HLB has a targeting strategy of full market coverage where it
targets all the segments and attempts in providing most of the financial service required. The
bank follows this strategy since it is one of the largest financial institutions possessing the
capacity of serving the entire market. Nevertheless, the full market coverage can be either
undifferentiated where the focus of bank remains on the customer needs thereby reaching a large
number of the customers or differentiated where the focus lies on serving different and multiple
needs.

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7.0 Positioning Strategy:
The products of HLB position itself through various attribute, offering various benefits,
through price/quality by offering various privileges with minimum amount of subscription,
through user and through application (Solomon et al., 2014). Some of the product and services
available includes investment loans, credit cards, insurance, deposit, personal banking, priority
banking and club rewards for customer loyalty.
Figure 1: Positioning Map for the Products of Hong Leong Bank
Source: By Author
Higher Interest RateLower Interest Rate
Low Credit
High Credit
Personal Loans
Priority Banking
Debit Cards
Credit Cards

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8.0 Factors Influencing Consumer Behavior:
Economic conditions: The decisions for consumer spending are influenced by economic
conditions of the market (Rani, 2014). This is true for the purchases related to houses, vehicles
and the household appliances.
Personal preference: At a personal level, the preference for personal loan remains
influenced by the priorities, likes, dislikes, values and morals.
Influence of Group: This has an impact on the decisions made by the consumer. The
preference for taking up a personal loan is often influenced by a group comprising of classmates,
family members, neighbors and the immediate relatives (Oliver, 2014)
Purchasing Power: This plays a crucial role in influencing the decisions of the
consumers in taking up a personal loan (Pate & Adams, 2013). The consumer analyzes the
individual purchasing capacity before undertaking a decision for buying the services or the
products.
9.0 Nature and Level of Competition:
Hong Leong Bank follows an oligopolistic market structure. The banking industry is
competing in such a market structure since an oligopoly market remains characterized by the few
sellers whose numbers remains limited (Baldwin & Scott, 2013). This market structure is a
special kind of imperfect market comprising of larger number of buyers and fewer number of
sellers. Moreover, either the oligopolist manufactures differentiated or homogeneous products
where the products remain differentiated by ways of trademark, service or design.
The direct and indirect competitors of Hong Leong Bank are as follows:

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 Capital Dynamics
 Maybank
 AMMB Holdings
 Public Bank Berhad
10.0 Conclusion:
On a concluding note, it can be said that the competitive strategy of the bank should pivot
on competitive delivery comprising of quality people, market intelligence, result oriented
capability, entrepreneurialism, localized community embedment and the manner in which it
scales itself in building newer names. It is however necessary to re-segment customers in
marketing the changes and re building compelling proposition in scaling sustainability while
being opportunistic in a tactful manner.

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icp=hlb-en-home-footer-aboutus
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results-q1fy19.html
hlb.com. (2018). Retrieved from
https://www.hlb.com.my/en/personal-banking/onboarding.html?icp=hlb-en-home-footer-
applynow

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bank
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