Branding Banks For Shareholder Value 4.0 Why Brand Banks

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The fourth in a series of papers tracing the path from customer perceotions to shareholder value in banking. This one deals with the value of a brand to banks.

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  • 1. Branding Banks for shareholder value Discussion Draft Section 3.0 Branding banks for shareholder value Section 4.0 Why brand banks? Planned series of papers Discussion Draft Release Date Order.Version Creating shareholder value - an outline 1.0 Mar-10 Knowing customers 2.0 Mar-10 How customer perceptions develop 3.0 Apr-10 Why brand banks? 4.0 Apr-10 Branding banks is hard 5.0 TBA Measuring customer perceptions 6.0 TBA Measuring customer value 7.0 TBA Gaps analysis 8.0 TBA Bank structure and brand control 9.0 TBA Process level brand control 10.0 TBA The brand story 11.0 TBA Communicating bank brands 12.0 TBA Valuing bank brands 13.0 TBA The future of banking 14.0 TBA Competitive bank branding strategies 15.0 TBA Anyone following this series of papers may notice that this contents page changes about a bit. This is because I keep thinking of new bits I have to cover. 1 Geoffrey Johns 21 April 2010
  • 2. Branding Banks for shareholder value Discussion Draft Section 3.0 Introduction This is the fourth in series of discussion drafts in which I attempt to trace the path from customer perceptions to shareholder value. The first covers shareholder value as a goal of the system and the analysis framework I use. The second is about knowing customers through segmenting on key characteristics. The third deals with how customer perceptions of banks are developed. This section deals with what sorts of advantages a bank can hope to get through good management of its brand. We shall see in the next section that branding banks is at the extreme end of difficulty among the spectrum of all brands. Indeed it is pertinent to ask, why invest heavily in branding at all? And, are there banks that dont bother too much to do so? This isnt a good time to be writing about branding banks. Their brands mostly look tawdry at best. Every day the British media carries stories about the rapaciousness of bankers. As the next section will show, it is very difficult to brand banks at the best of times. Right now in many places around the world the best image that banks can hope for is that of a necessary evil. Nevertheless if a bank can achieve a positive brand it is a major competitive benefit as this section will show. In a later Section, I shall show how to go about measuring the value of brand. A major theme of this series of papers is illustrated in the exhibit below. Branding Branding banks is next banks is vital to impossible Surmounting the impossibilities creates sustainable competitive advatage 2 Geoffrey Johns 21 April 2010
  • 3. Branding Banks for shareholder value Discussion Draft Section 3.0 My thesis is that, because branding banks is both so important and so difficult, finding ways to achieve it is an organisational competence that yields sustainable competitive advantage. To do this the brand must be embedded in management structures and processes and also in deeply held corporate values. The pattern of decisions that create a brand need a lot of infrastructural glue to keep them coordinated. The role of brand In terms of the Gaps diagram I introduced in Section 1, brands cover a lot of ground. One of the first points I want to make is that the communication of the value proposition to the market is a part of branding. In banking, marketing communications have a supporting role that works only when attuned to customer experience. Shareholder value Gap 7 Executing the solution Gap 6 G Gap 5 5 Creating the solution Communicating the product service offering Gap 3 Gap 8 Design of product service offering range 4 Gap Gap 2 Comprehension of customer beliefs, needs, values and behaviour Gap 1 Selecting / specifying the market Banks brands, we have seen are founded to a large extent on the experience of customers. This experience is not easily challenged by what a bank may wish their customers to believe, as I discussed in Section 3. 3 Geoffrey Johns 21 April 2010
  • 4. Branding Banks for shareholder value Discussion Draft Section 3.0 Marketing communications Media comment Trusted advice Contradiction Own Confirmation filtered experience sought reinterpreted Information The view of brand that I have expressed is the modification of customers expectations in a way that shapes how they experience their interactions with a bank. BRAND Customer expectations The objective Customer quality of the perception of experience the experience The matrix shown below shows the potential outcomes of this modification. It sets the customers cumulative experience of the brand against their experience of a particular event. Each can be classed as either adverse or favourable experiences. 4 Geoffrey Johns 21 April 2010
  • 5. Branding Banks for shareholder value Discussion Draft Section 3.0 Brand experience Adverse Favourable Adverse Reinforcement Containment Event experience Favourable Opportunity Reinforcement Adverse reinforcement and favourable reinforcement are much the same but with opposite effect. This is a compounding effect and has the characteristic nonlinearity tha