Marketing for Managers: Commonwealth Bank Strategies Analysis Report

This report provides an in-depth analysis of the Commonwealth Bank's marketing strategies. It begins with an introduction to the bank, its services, and its market presence. The report then explores the bank's product and market orientation, detailing its diverse offerings such as business accounts, loans, and investment options. A significant portion of the report is dedicated to the bank's value proposition, emphasizing integrity, collaboration, excellence, accountability, and service. The report also analyzes customer needs, wants, and demands, highlighting the importance of digital channels, responsive customer service, and financial technology. Factors influencing buying behavior, such as purchasing power, personal preferences, and economic conditions, are also examined. Furthermore, the report assesses the nature and level of competition in the Australian banking market, considering both major and regional banks. The analysis concludes with an overview of the key takeaways and implications for the bank's marketing approach.

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Commonwealth bank
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Contents
Introduction...........................................................................................................................................2
Product/ Market orientation...................................................................................................................2
Value proposition and differentiation....................................................................................................3
Customer’s need, want and demand......................................................................................................4
Factors influencing buying behaviour...................................................................................................6
Nature and level of competition.............................................................................................................7
Conclusion.............................................................................................................................................8
References.............................................................................................................................................9

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Introduction
Commonwealth is an Australian bank having business across US, UK, New Zealand, Fiji and
Asia. The bank is one of the recognised brands in Australia. It was established in 1911. The
headquarter is situated in Sydney. It is a leading provider of financial services. The bank
provides financial services such as funds management, institutional and retail banking,
superannuation, investment, insurance, and share broking products (Abeza, O’Reilly &
Seguin, 2017). Commonwealth bank listed on the Australian stock exchange in 1991 and is
the largest Australian listed company as of 2015.
Product/ Market orientation
The Commonwealth Bank offers a huge variety of products and services to customers such as
saving accounts, credit accounts, transaction and loans. The bank has a large network of
ATMs. It also offers services to people who are planning to shift to Australia. The business
banking products offered by bank are:
 Business accounts: The accounts available by the bank include Business transaction
account, Premium business cheque account, Farm management deposit account and
business online saver.
 Business credit cards: The Commonwealth Bank has a large variety of credit cards
designed for businesses, Platinum credit card, Interest free rate card, Low rate card
and the Business awards. The Platinum credit card allows a business to earn 3 flyer
points for every dollar spends on the purchases such as supermarkets, petrol stations
and departmental stores. The bank offers corporate credit card especially for large
companies (Huang & Sarigöllü, 2014).
 Business loans: The bank offers loans for reinvestment and expanding business, as
per the suitability of business. The range of loans include Better business loan, Bill
facility, Business overdraft, Market rate loan, CommSec margin loan and Business
line of credit. The bank also offers loan for car equipment and finance, credit cards
and bank guarantees (Järvinen & Karjaluoto, 2015).
 Merchant services: The merchant services are used by the business to accept
payments through EFTPOS machines. The bank offers range of portable payment
processing machines such as Leo, Albert and Emmy. The bank also offers 24X7
support service.

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 Asset finance: The bank makes available car and equipment finance with payment
plans. These are designed according to suitability of cash flow of business. A business
can choose equipment finance, car finance, medical equipment finance and
technology equipment finance (Bianchi & Mathews, 2016).
 Investments: The bank offers short, medium and long term investments which helps a
business to cover cash flow shortfalls and to expand business. These investments have
great role in building wealth for future.
 International money management: A huge range of services is offered by the bank to
deal with international business transactions, like products for importers and exporters
and international payment solutions.
 Insurance: The business insurance products are available by the Commonwealth bank.
It includes life insurance, wholesale life insurance, business overheads cover, vehicle
insurance and income protection packages (Levy & Cohen, 2016).
 Superannuation: The bank creates super solutions as per the need of business and has
also options of employer superannuation and self-managed super fund. The products
include self-managed super fund, essential super and first choice employer super
fund.
Value proposition and differentiation
Value proposition is what a business does and how well is performed. Value proposition is a
statement used by bank to explain how their product solves problem of customers and why a
customer should buy product or service (Arnett & Wittmann, 2014). Value proposition is a
chance to engage with customers.
 Integrity: The commonwealth bank believes in integrity. It is the most important value
proposition of bank. Integrity means saying and doing what is right for customers,
people, community and shareholders.
 Collaboration: The bank believes in working as one team. The bank has a strong
record in delivering value to customers and shareholders. It has more than 52,000
employees working as a team.
 Excellence: Commonwealth bank believes in excellence which means doing best. It is
not about only having mind set. The bank is constantly trying to do best and deliver
world class service.

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 Accountability: The value proposition of bank is accountability means taking
ownership. The bank follows and delivers to customers what was promised to them
(Rezaei, 2015).
 Service to clients: Service is the most important value proposition of bank which
means to help customers. It makes bank leading financial service provider. The bank
helps customers to attain their goals and to meet their needs.
 Service to support community: The bank has been helping communities of Australia
to develop and grow. The company is engaged in supporting communities to make a
real difference.
Digital experience differentiates the Commonwealth bank. The primary way of consumers’
interaction with banks is digital channels. Two third of customers transacts through internet
banking. Digital experience has a great role in determining how consumers feel about banks.
The consumers rated the bank as providing best digital experience. The bank makes continual
investment in the features of online banking application and services. It is identified that
customers who use online banking hold most value for the bank. It encourages customers to
choose products in both present and future. The bank is the first to introduce ‘lock, block and
limit’ facility for credit card customers. It allows customers to track and control spending
online. The credit card reward points also differentiate from other banks (McDonald &
Wilson, 2016). The customers need 2 ½ of the bank’s award to get one flyer point. The bank
also launched Australia’s first card less cash service which enables customers to use smart
phone application to withdraw cash without card at bank’s ATM.
Customer’s need, want and demand
Meeting customer needs means increasing capacity of banks. The need and want of
customers can be determined as:
 Digital channels: A large percentage of customers rely on digital channels than
physical branch. The bank needs to focus more on building improved digital
experience. The customers are more segmented and complicated. Personal banking
needs to know customers and understand what kind of product or service they are
looking for. Digital channels not only provide facility to customers but it boosts up
the sales of bank also. The customers came to know about additional services given
by bank. Digital channels are helpful in cross selling (Leite & Azevedo, 2017).

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 Responsive customer service: Service quality is necessary as it is the important reason
customers switch to other banks. The bank needs to be transparent and quick to solve
problem of customers. The poor customer service is the primary reason of leaving
banks. The reason was their issue was not solved in first contact with bank. The
responsive customer service not only helps to win customers but attains existing ones.
The customers can interact more via digital channels, it helps banks to better
understand need of customers. These channels increase retention by giving extra offer
on products.
 Financial technology: Financial technology is the new technology expected by
customers which aims to compete with traditional methods to deliver financial
services. It enhances core banking value. Financial technology includes the use of
phones for mobile banking and investing services (Patti, et. al.2017). This technology
is used to replace existing financial banks. It is useful for customers, as they do not
need to carry cash as it is electronic mode of payment.
 Loans at low interest: After deciding the type of loan, the customers focus on the rate
of interest charged by bank. The majority of customers like to take loans at low rate of
interest. So, the customers take loan only after comparing interest rate of banks. The
customers automatically shift to the banks who charge low rate of interest. The
Commonwealth bank provides home loans, commonwealth portfolio loan, personal
loans, business loans and more. The bank also provides loans at variable and fixed
rate.
 Fair rates and fees: the customers expect fair rates and fees from banks. The banks do
not pay dividend to external shareholders, so banks are supposed to deliver better
value to customers. The banks’ balance the rates paid to depositors and the rate
charged from borrowers so that fair rate and fees can be charged from customers
(Katsikeas, et. al.2016).
Expectation of customers
1. More personalisation: Customers want bank to put information and products, they are
in need. Nearly 50% of customers will change the bank, if they do not find the
products wanted by them. The toll free number should be displayed on website, to
provide them 24X7 help. So, at the end of the day, the staff should take a look at
customer requests and questions.

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2. More options: The customers like to interact with bank via many options other than
physical branch like digital and social media. The phone is the most preferred tool and
apps are the most suitable tool. In the recent years, the use of web, online
communities and chats has increased subsequently.
3. Constant contact: The majority of customers expect follow up efforts to fill their
experience. It benefits an organisation on large extend. Keeping in touch with
customers helps to reduce costs and increase revenues as well. It provides sufficient
information to customers at right time (Chng, et. al.2015).
4. Listen closely, respond quickly: The banks need to respond to feedback of customers.
To act on it to makes customer’s experience better. Real-time online surveys provide
the quick response to customers.
Factors influencing buying behaviour
Purchasing power: The purchasing power of consumer plays important role in influencing
buying behaviour. The consumers analyses the purchasing power before making a decision to
buy banking products and services. Segmentation is done in banking on the basis of need and
income of consumers (Lusch & Vargo, 2014). Like a person earning higher income, like to
invest in fixed deposits.
Personal preferences: At personal level consumer behaviour is influenced by the need of
customers. Their need decides the demand for a product. The type of loan also depends on the
requirement of a person such as personal loan, home loan, business loans, portfolio loans etc.
The customer’s preferences keep on changing depending on their requirements.
Economic conditions: Buying banking products are also influenced by the economic
conditions prevailing in the market like buying life and health insurances to see ailing
condition of population in economy (Tarka, 2017). The growth of share market also
influences buying behaviour and leads a person to invest in shares and mutual funds.
Marketing campaigns: Advertisement has a great role in persuading purchasing decisions
made by customers. It even brings a great shift in market shares of banks (Röcker, Homburg
& Vomberg, 2016). The marketing campaign done by banks influences purchasing decision
of consumers to a large extend that they may prefer other bank.

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Group influence: It also affects the buying behaviour of customers. The primary group which
influences customers are classmates, family members and relatives. The secondary group
includes neighbours and colleagues, like taking insurance policy. They tell the benefits of
taking insurance to influential person. It may convert the lead to perspective.
Nature and level of competition
New market entrants results in high degree of competition. The customers have many options
in Australia to meet their financial needs such as major banks of the country, regional banks,
credit unions, non-bank lenders and non-financial consumer brands. The comparison
available on online sites makes easy for customers to compare products of different banks
(Cross, Belich & Rudelius, 2015). The National Consumer Credit Protection Act, 2009 has
made it compulsory to provide necessary key facts sheet and information to customers
applying for credit card or home loan.
 Deposits: The numbers of deposit taking institutions are increasing in Australia as
APRA lowers licensing difficulties. The country has 152 authorised institutions out of
which 108 are approved to take household deposits. The banks which held household
deposits are increased by 43% from 2012 to 2017. Since the introduction of Basel III,
the banks have started focussing on competing for domestic deposits and term
deposits. The banks have concentrated more on source of funding (Bianchi &
Andrews, 2015).
 Payment credit cards and personal credit: The competition has increased for payments
as franchises compete in the financial system such as AliPay, Apple, PayPal and
FinTech companies. For instance Apple launched a virtual Apple Pay prepaid credit
card which accepts Apple payment and it can also send peer to peer payments via
Apple’s iMessage service (Babin & Zikmund, 2015). There is increase in number of
service particularly in credit cards. In Australia, there are 100 credit card brands offers
250 credit card products.
 Mortgages: Australia has intense competition in the mortgage market, refinance made
up 36% of the volume of housing finance commitments. The mortgage brokers
facilitate competition. The Australian Finance group has 2,875 brokers who have right
to use more than 3400 products. More than 16000 residential brokers are active in the
industry; The value of mortgages has also increased from 47.7% in 2012 to 54.3% in

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2015. The consumers are taking turn towards non-bank lenders because of the
increasing growth in the less regulated banking sector for mortgages.
 Corporate and institutional banking: The entry of international banks and Asian banks
has made competition intense in the corporate and institutional lending market of the
country. It has led to significant liquidity in the market. Institutional investors are also
an option for borrowers where they are seeking longer tenancy. It combined with
growing capital costs of Australia’s major banks and resulting in great price
competition for Australian banks (Lantos, 2015). It has subsequently reduced the
market share of corporate and institutional banking segment.
 New entrants to the Australian market in recent years: The FinTech industry of
Australia has record investment of $656 million in 2016. It is seen because of the less
competition in the financial system has encouraged new entrants. The Sydney based
FinTechs has also increased five times more in 2017 than 2014. In the recent years,
Australian banks have also united with the new market applicants (Bellin, 2017). It
provides talent and innovative ideas. The banks that are established offer mature
process and access to distribution channels.
Conclusion
From this report it has been concluded that Commonwealth bank is one of the leading bank of
Australia. The product of the bank has quite different features than other banks. The
company’s value proposition has been explained. The bank differentiates by digital channels,
banking app and the ‘Lock, block and limit’ facility for credit card holders. The market
campaign, economic conditions and personal preference influence buying behaviour of
customers. The competition is constantly growing in the market of Australia. The new
entrants shape the market for banking services. The important part of competition in Australia
is that it has not compromised financial system stability.

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