Comprehensive Marketing Analysis of HSBC Bank in the Maltese Market

This report provides a comprehensive marketing analysis of HSBC Bank, focusing on its operations within the Maltese banking sector. It begins with an introduction to the importance of marketing and its role in customer satisfaction and profitability, specifically within the context of the Maltese banking industry. The report presents a background of the industry and HSBC's market positioning, highlighting its unique selling propositions. A detailed marketing audit is conducted, incorporating both external and internal factors, utilizing PESTLE and SWOT analyses to assess the competitive landscape, strengths, weaknesses, opportunities, and threats. The report critically evaluates HSBC's current marketing mix and identifies gaps between its strategy and the external environment. It then offers recommendations for new marketing mix actions to bridge these gaps, aiming to enhance customer loyalty and overall market performance. The report concludes with a summary of findings and recommendations, supported by references to relevant academic and industry sources.

Marketing

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1. Presenting background of industry and market positioning...............................................1
2. Presenting market audit that includes external as well as internal factor...........................3
3. Critically defended new marketing mix actions to achieve gaps between company's
marketing strategy and external environment........................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Marketing plays an important role in every business and is done to satisfy customers. It is
a process used to sell products and services in market to raise company's profitability. Project
deals with banking sector of Malta in which it focuses on HSBC Bank which is one of the most
leading and international banking and financial service provider and offer variety of financial
services to customers.. The present study assists to understand meaning of marketing and will
critically review the essential conditions which helps the firm to build customer's loyalty and
also deliver total customized’ experience for market segments.
Present study will describe a background of industry in which HSBC deals in and its
market positioning with its unique selling propositions. Further, it will also present marketing
audit that includes both external and internal factors by using PESTLE and SWOT analysis.
Report will also critically evaluate new marketing mix actions to achieve gaps between
company's present marketing strategy and external environment.
MAIN BODY
1. Presenting background of industry and market positioning
Background of Banking industry
In 2017, the banking sector in economy of Malta grew up to 6.6% and underpinned by an
increase in export of goods and services. From last many years, the banking sector in Malta has
grown to four retail banks which provides the best services to their customers. Around 71 percent
of banking sectors are present in Malta.
Overview of organisation
HSBC deals in banking sector of Malta and currently, it is the second oldest bank in
Malta which offers variety of financial products to its customers. Malta is the home country to
many international banks, these banking institutions offers special services that supports
operations abroad. The company's rivals are HSBA, UBS and Citigroup (Liu and et.al.,2017).
Currently, the company's revenue is continuously increasing such that it profits revenue in June
2018, is amounted to 16.2 euro which decrease 9.8 euro during last few years. There are nearly
about 25 banks in Malta which provide the best services to its customers and also support by
maximum shares in expanding its economy. Moreover, this country also offers remarkable
growth opportunities for banks and provide different options to their customers in Malta.
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Therefore, the global banking sector is in integration mode because of highly capital investment,
raising cost that directly creates impact upon bank's profitability.
HSBC provide wide range of financial products to their customers and it operates its
services in more than 88 countries. The financial position is quite strong and recently the
company offer online services to their customers to raise its profitability and productivity.
Market Positioning
In Malta, the size of banking sector stands at 40 position in GDP from last year which
shows that it imparted a large amount to country's economy. Therefore, it has been critically
evaluated that companies operating business in banking and financial sectors such as HSBC
share a large amount of their part to the economy of Malta (Huang and Sarigöllü, 2014). HSBC
which offers variety of financial products to their customers and has an excellent position that
support the residential property market. It also continued its support to Malta's real estate market
and provide the best range for home loans . A value-based positioning strategy is used by HSBC
to emerge as a bridge between different segments of customers around the world.
HSBC is operating business in a diverse industry which provides a wide range of
services such as custodian banking, online services, trade and projects finance with wealth
management services.
it has been analysed that HSBC enjoys 5th position in Malta and provides best services to
their customers in order to raise its profits and sales. It provides variety of financial products to
their customers so that it will help to sustain its brand image in market.
Unique Selling Positioning: The unique sell proposition of HSBC are that it provides
online services to its customers so that their customers can easily access the banking services
which are provided by firm . In the present year of 2018, the quoted company is in an excellent
position in market. (USP of HSBC, 2018). The unique selling proposition for HSBC is its
mission. An organisation has achieved popularity due to quality of services. It also provides
variety of financial products at such as loans, at affordable interest rate which makes an
organization differ from other. HSBC has different perspective of value that takes pride to
understand the significance of cultural differences. The company has strong competitive
advantage with regard to its market strategy and also has a brand equity.
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Targeting: Differentiation targeting strategy is what used by HSBC Bank in order to
satisfy the saving and investment needs of the customers.
2. Presenting market audit that includes external as well as internal factor
Marketing Audit
It is an analysis of organisation’s marketing environment that includes external as well as
internal factors. It helps to determine company's goals, objectives, principles and areas of
problems as well as opportunities and further find out the action of plan to raise their marketing
performance (Datta, Ailawadi and van Heerde, 2017). Marketing audit is done to analyse internal
and external environmental factors which can be a barrier to business performance.
Internal factors
To identify HSBC internal micro factors, SWOT analysis framework has been used. It is
a tool that is used to identify company's strengths, weaknesses, opportunities and threats which
can affect firm’s internal environment. It helps ion identifying the threats which might effect
firm performance. SWOT analysis tool is used for analysing the internal strength and weakness.
SWOT analysis of HSBC is mentioned below:
Strengths: HSBC is counted as one of the most leading banks in all over the world,
whose network is in almost 88 countries with around 275000 employees. Further, HSBC has a
universal banking model that consists of one corporate centre.
 Retail banking and Wealth Management (RBWM)
 Global Banking and Markets (GD&M)
 Global Private Banking (GPB)
 Commercial Banking (CMB)
The company has diversified business with exceptional talent pool which makes it
world's largest bank at global level. The company is combined with organization strengths and
global network that provides HSBC a protection with its political and economic instabilities
(SWOT of HSBC, 2018). Therefore, the quoted company qualified with an honoured title of
'World's Best Bank' at Euro- money Awards of Excellence in 2017.
Another strength for HSBC is its strong capital position which is supported by its Capital
Equity Tier 1 ratio that is 14.6 percent. In accordance with this, in 2015, the size of balance sheet
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has also increases its customer accounts and even asset were increased by 5 percent in 2017 as
compared to 2016. This is all because of its strong capitalization on which HSBC is able to affect
share buybacks and even provide property net income as well. From past many years, HSBC
provide an attractive investment to its investors with good dividend and even at the time of
financial crisis. HSBC also provide stable net income in order to maintain company's investor
confidence (Fan, Lau and Zhao, 2015). Presently, the company offers a dividend of 5.3 percent
which no other firm provide in such a high rate while dividend pay-out ratio is 60 percent and
may be increases up to 70 percent in 2019. It shows that company has strong and good dividend
records which is considered as its biggest strength.
The financial position of HSBC is quite strong and it has been analysed that from 2014 to
2016, revenue growth of firm increased up to 5 percent and in 2017, it raised its financial term up
to 7 percent for banking products which has helped an organisation in increasing revenue.. The
good financial records denotes firms potential to expand its business at global level such that it
also provide online services in order to provide customers an ease in accessing the products or
services. Moreover, it has been analysed that HSBC provides best services to their customers
with high interest financial products so that customers can enjoy all facilities of a banking sector.
The company enjoys the best competitive advantage. Having a diverse function and best
products shows that the company is risk bearing which no other company do. HSBC has also
entered into new financial market with the latest financial services because they help to increase
company's revenue or profitability.
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Weaknesses: HSBC combine with small sectors company that has made it compromising
to more risk which will lead to profit shortfalls. In 2012, the bank was involved with prime
markets in US where it experienced financial scandal which directly impacted upon company's
brand image (Pavlou and Stewart, 2015). Currently, quoted company also announced that HSBC
is being able to invest into foreign exchange trade market but it also did not support a company
to fix its reputation in market. Further, it also announced lay-off's as a part of cost cutting method
that also created negative image of bank for the point of view of stakeholder base as well as
customer's base too.
Even there is a wide gap in product range of company and this differ choice gives an
entry to new competitor in a market. The company also has a weakness such that it did not tackle
challenges present by new company and as a result it lost small market share in a country.
Moreover, the financial planning is also done not done at proper manner which creates negative
impact upon its brand image (Goworek, McGoldrick and McGoldrick, 2015). The company has
weak product demand forecasting due to which firm miss growth opportunities as compared to
its rivals. Even the profitability ratio and its net contribution percentage is also quite below from
the average of industry and decline in markert share is considered to be as other majopr
weakness of HSBC.
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Illustration 1: SWOT Analysis
Source: (SWOT-ANALYSIS, 2018)

Opportunities: Having a strong capitalization position will help to acquire further assets
in order to strengthen financial position of bank and to sustain its brand image in market. It has a
great opportunity to acquire or gain its market share by acquisition with Bank Ekonomi in
Indonesia.. By introducing formal Corporate Social Responsibility program and takes ethical
decision making will provide opportunities to clean up its negative image which is sometimes
created by its competitors. Lower interest rate will also help HSBC to boost market share in
different countries.
Moreover, changes in social factors as well as customer behaviour such as saving habits
also opens a new market for HSBC and provide a great opportunity to build new revenue stream
and diversify its existing products into new categories. Another big possibility for a listed
company is low inflation rate which will also bring more stability in market and can modify its
credit rates and changes it to lower interest rate for their customers. New customer from online
channel is also another option for HSBC to raise it is profitability and if it invests on this, then its
sales will definitely raise.
Threats: HSBC has a threat of financial losses, credit issues and some unethical
behaviour of world's bank and further the bank faces tough competition in market which is
another threat for HSBC. Different inquiry and scandals also undermine confidence in a listed
company. The firm have to change its reporting mechanism and also provide different evidence
of its investment methods and further regulatory changes in countries also creates threatening
upon firm's profitability (Bahadir, Bharadwaj and Srivastava, 2015). Recession is another threat
for HSBC because if country's recession power will fluctuate then it will directly affect
company's overall performance while on the other side, shortage of skilled workers in market is
also a threat to even growth of company's total turnover.
External factor
To identify company's macro factors, PESTLE analysis is a tool that helps to identify
influences from political, economic, social, technological, legal and environmental factors which
are discussed below:
Political factor: HSBC is an international bank and it operates in different countries and
they all have different laws, regulation and policies. HSBC must comply with all laws which are
provided by government in order to operate successfully and effectively in financial market
Further, HSBC also have its own protection strategies which protect firm against any
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governmental restrictions and limitations (Olson and et.al., 2018). Political instability of country
directly affect company's profit and further. Therefore, before entering or emerging in any
market, HSBC follow antitrust laws and all legal framework related tocountry.
Economic Factor: Economic factors creates direct impact upon company's overall
profitability and productivity. Factors such as inflation rate, recession, interest rate affect
company's overall turnover. The growth of HSBC is completely based on the stability of foreign
exchange rate and worldwide stock market.. It has been analysed that the performance and
revenue of a company increases just because of global and commercial banking market rapidly
developing regions which encourages economic conditions (Goldberg, Fishbein and Middlestadt,
2018).
If the country has economic instability then it will create negative impact upon company
such as there may be chances to raise company's interest rate which will affect on the demand fo
loans. Even in 2008, these factors also contribute and help HSBC from financial crisis in order
to gain strong economic power.
To identify whether the company has potential for market growth, HSBC uses unique
strategy for dealing with changes in economic factors such as growth rate, inflation and
indicator also like Bank industry growth rate, spending powers of customers .While expanding
its business to another country, HSBC identifies its economic factors such as infrastructure
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Illustration 2: PESTLE Analysis
Source: (PESTLE Analysis, 2018)

quality in Bank industry, cost of labour and productivity, government intervention in free market,
etc.
Social Factor: HSBC promotes a healthy interaction of different communities, cultures
and peoples such that it got awarded in 2016, 2017 and 2018 as 'Times top 50 employer for
Women' and 'Company of the year ' etc. These prestigious awards shows that the company has a
wide network and promotes a culture of involvement (Andreasen, 2018). Social factors mainly
focus on changing trends of society, forever changing customer's taste such that these creates
directly impact upon demand for company's products or services .
Even HSBC also faces some social factors like people of Malta wants to lead a luxurious
and healthy lifestyle on the basis of credit while government also encourages SME and there is
sudden growth of Islamic community which will affect outer environment of a company by
affecting its overall profitability.
Moreover, for welfare of society, HSBC provides scholarship during 2016 as its mainly
focus on promoting education to underprivileged children and provide them opportunities for
taking an advantage of education. Further, it also provides funding for programs related to
entrepreneurial skills that help youngsters to develop cultural understanding among them.
Technological Factor: Adoption of new technologies will affect the way on which
HSBC operates its work on daily basis such that a quoted company work at global level so it uses
the latest technologies but has a fear of cyber-attacks. Company also faces problems related to
loss of sensitive data because of the negligence by HSBC technical management team. As a
result, it is an operational weakness which profaned data Protection laws (Flora, Schooler and
Pierson, 2018). Therefore, whatever the data has lost does not affect the functionality of a
company but so many loyal customers left and cut themselves from an industry.
Furthermore, the quoted company keep their system up to date in order to provide the
best facilities to their customers. Such as recently the company started its online services which
must be improved in order to raise company's profitability. To cope up with advance
technologies into work area will also create impact on value chain structure in financials sector.
Legal Factor: In every country, all the legal framework and institution are not just only
protecting intellectual property rights of a company but it is quite necessary for a firm to evaluate
all legal terms before entering into any new market. It is essential to consider all legal factors
such as anti- trust law Discrimination law, copyright, patent or intellectual property law, health
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and safety law, etc. However, the independent commission on banking had also recommended
for the creation of a country ring- fenced bank and this is considered one of the largest project
that is undertaken by all companies in the terms of some structural changes (Hulland,
Baumgartner and Smith, 2018). Even in 2017, July Prudential Regulation Authority also
provided a licence to all new banks in order to emerge in new market.
Environmental factors: These factors affect company’s external environment and for
HSBC it is quite necessary to follow environmental and other laws which are designed specially
for Bank Industry. So before entering into new market it is essential for every company to
follow all laws related to environment. Further, the company also follow Corporate Social
Responsibility which has assisted an organisation in gaining customer loyalty. It has helped firm
in incresing employee morale.
Market attractiveness and potential for Growth: The attractiveness of market
completely depends upon business growth. Therefore, it mainly includes in growth rate of
market, size, expansion, competition, cost of entry etc.. Thus, the potential completely depends
upon the expectations of leadership for success (Sargeant, 2016).
While the main aim of HSBC is to provide the best financial products to customer and
improve returns to shareholders. Moreover, company wants to accelerate growth from Asian
businesses and be a leading bank that support the transition to low- carbon economy. Thus, by
improving capital efficiency and redeploy capital into higher return the company gain a larger
market share.
3. Critically defended new marketing mix actions to achieve gaps between company's marketing
strategy and external environment
Marketing mix is a tool that help company to achieve all defined objectives in order to
maintain brand image in market. 7 P's of marketing mix are as follows:
Product: HSBC provides all kinds of financial services to its customer from personal to
business and to corporate banking. Bank also provide cash and payment management to their
foreign clients and also provide information about global financial markets to their regular
customers. HSBC bank also provides services such as fund & unit distribution and cash
management. It is institutional banking which includes trade services, clearing & custody, e-
banking services to insurance companies and securities houses, etc. It has a wide range of
solutions that are provided for national and international business in order to meet out their
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specific needs (Marketing mix for HSBC, 2018). The company has the best financial services for
all age group people which includes resident and non- resident peoples such as insurance
services and investment opportunities. It also offers services to small and medium business such
as multi branch banking and door -step banking. HSBC can provide the online solutions
related to the investments and cash management services.
Price: HSBC have different pricing strategy for all products and services and bank
prefer services which provide customers satisfaction. As the bank is in competitive market so it
is obviously that it require to change its pricing policies according to market trends or its
competitors.
In order to eliminate competition, HSBC adopted an aggressive policy of pricing which
means acquisition through available funds (Lovelock and Patterson, 2015). Further, to maintain
customer base, bank also introduce value added pricing policies for their variety of services.
Competitive pricing strategy can be adopted by HSBC banks , as it will help organisation in
reducing the negative effect on the fluctuation of economic factors on its business.
Thus, differential pricing policy is quite beneficial because they can charge minimal for
their products and help to gain large customer base. Listed company also provide the best
financial products and services at such a cheap rate as compared to their rivals which has helped
firm in attractinbg wide range of peoples towards it.
Promotion: HSBC uses extensive promotional strategy in order to create awareness
about banking serivces. Therefore, advertisement is the best tool and company also uses
billboards and newspaper to provide their latest updates to their customers. In order to keep
familiar with bank, informative commercials are also broadcasted at regular interval on
television. HSBC also have a sponsorship for sporting events in order to sustain its brand image
in market. It also keeps conducting activities related to Corporate Social Responsibility in order
to stay connected with people (Armstrong and et.al., 2015).
The usage of effective promotion helps HSBC to promote its products and services
effectively. In this stage, the different strategies have been implemented in order to achieve the
organisational goals and objectives. HSBC can utilise social media or other digital platform for
promoting their products or services.
Place: The company has its wide range of network at global level and it operates in
around 88 countries which shows that it has a large customer base. Even it also set up their
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