Why are Brands in Focus
The commercial banking industry has undergone significant change in the past years. “Today, large commercial banks operate in a far more dynamic marketplace. The cost of funds fluctuates rapidly and there is increased competition from both inside and outside the traditional banking industry.“ With growing competitiveness in the banking industry, and similarity of services offered by banks, it has become increasingly important that banks identify the factors that determine the basis upon which customers choose between providers of financial services. Aaker and Joachimsthaler state “in an increasingly crowded marketplace, fools will compete on price. Winners will find a way to create lasting value in the customer’s mind.”2 But considering the national bank market many banks still do exactly this. They compete on price as the latest campaign of the ‘Commerzbank’ shows (3.1% p.a. until the end of February 2005). Although the last years proved that in times of rapid economic change many German banks are not protected. They experienced the decline of profits, the loss of customers towards new financial providers and reacted with closures of branches and the dismissal of thousands of employees. Then they stepped into the war on price advantages without realising that other banks, like the direct banks, strive to a position that allows cheaper banking. Additionally the image of the national bank representatives is actually influenced by discussion about unethical payment in the management boards and some managers were recently under suspect of agreeing to payments that for other managers who did not deserve it in consideration of the general public. The same customers that receive this news every day shall be the customers that trust the bank employees and do business with them. Modern consumers are even more critical and better informed before stepping into banks. By mass media and sources like the internet they are informed or even inform themselves so it is harder to satisfy them because their general knowledge about banking products is better than a few years ago. Besides they learned from their experiences made in the last years. Hence it is necessary to have a tool to be able to persuade and tie consumers in different ways than the price on the current account. The brand can and must fill this gap. Consumers still are human beings and have emotions that can be influenced.
Table of Contents
1 BASICS
1.1 WHY ARE BRANDS IN FOCUS
1.2 WAY OF ANALYSIS AND WORK OBJECTIVES
1.3 BASIC DEFINITIONS
1.3.1 Brand
1.3.2 Branding
1.3.3 The Brand as a Concept
2 MARKETING COMMUNICATION (MC)
2.1 CONTENTS OF MARKETING COMMUNICATION
2.2 INTEGRATED MARKETING COMMUNICATION (IMC)
2.3 ATTRIBUTES TO BE INTEGRATED
2.3.1 Employees
2.3.2 Customers and business partners
2.3.3 Databases
2.4 CORPORATE COMMUNICATION
2.4.1 Components and Objectives
2.4.2 Corporate Branding
2.4.3 Corporate Banking
3 BUILDING STRONG BRANDS
3.1 BRAND IDENTITY VERSUS BRAND IMAGE
3.1.1 Sending Out Brand Identity
3.1.2 Brand Image Perception
3.1.3 Brand Identity versus Brand Image
3.1.4 The Need for Differentiation
3.1.5 Tools for Building Strong Brands
3.1.5.1 The Differ Model
3.1.5.2 The Brand Identity System
3.1.5.3 Comparing Differ and The Brand Identity System
3.2 BRAND VALUE
3.2.1 Brand Added Value
3.2.2 Defining Brand Equity
3.2.3 Measurement of Brand Valuation
3.3 BRAND LOYALTY
3.3.1 The Concept of Brand Loyalty
3.3.2 How to create Commitment
3.3.3 Building Brand Community
3.3.4 Loyalty in the Financial Sector
4 SERVICES AND BRANDS
4.1 GROWING IMPORTANCE OF SERVICES
4.2 SERVICES BRANDING
4.2.1 Intangibility
4.2.2 The Inseparability of Production and Consumption
4.2.3 Heterogeneity
4.2.4 Perishability
4.3 THE POSITIVE ‘VICIOUS CIRCLE’
4.4 THE PECULIARITY OF FINANCIAL SERVICE BRANDS
4.5 CRITERIA FOR SUCCESSFUL SERVICE BRANDS
4.5.1 Focused Position
4.5.2 The Importance of the Consistent Message
4.5.3 Creation of (New) Values
5 ANALYSIS OF FINANCIAL SUPPLIERS
5.1 DAIMLER CHRYSLER BANK
5.2 CASE STUDY - POSTBANK
5.3 CASE STUDY – CITIBANK
6 CONCLUSION
Objectives & Core Topics
This work aims to analyze the role of branding in the financial services sector, focusing on why traditional price-based competition is insufficient. The research investigates how banks can create lasting value, differentiate themselves in competitive markets, and foster stronger relationships with their customers through effective brand management strategies.
- Theoretical foundation of branding, including identity and image concepts.
- Integrated Marketing Communication (IMC) as a tool for financial service providers.
- Differentiation strategies and the importance of focused positioning in banking.
- Brand value and loyalty management in the context of services.
- Comparative analysis of financial institutions (DaimlerChrysler Bank, Postbank, Citibank).
Excerpt from the Book
1.1 Why are Brands in Focus
The commercial banking industry has undergone significant change in the past years. “Today, large commercial banks operate in a far more dynamic marketplace. The cost of funds fluctuates rapidly and there is increased competition from both inside and outside the traditional banking industry.“1 With growing competitiveness in the banking industry, and similarity of services offered by banks, it has become increasingly important that banks identify the factors that determine the basis upon which customers choose between providers of financial services. Aaker and Joachimsthaler state “in an increasingly crowded marketplace, fools will compete on price. Winners will find a way to create lasting value in the customer’s mind.”2 But considering the national bank market many banks still do exactly this. They compete on price as the latest campaign of the ‘Commerzbank’ shows (3.1% p.a. until the end of February 2005). Although the last years proved that in times of rapid economic change many German banks are not protected. They experienced the decline of profits, the loss of customers towards new financial providers and reacted with closures of branches and the dismissal of thousands of employees. Then they stepped into the war on price advantages without realising that other banks, like the direct banks, strive to a position that allows cheaper banking. Additionally the image of the national bank representatives is actually influenced by discussion about unethical payment in the management boards and some managers were recently under suspect of agreeing to payments that for other managers who did not deserve it in consideration of the general public. The same customers that receive this news every day shall be the customers that trust the bank employees and do business with them. Modern consumers are even more critical and better informed before stepping into banks.
Summary of Chapters
1 BASICS: Introduces the shifting dynamics of the commercial banking market and defines foundational branding terms to establish a clear distinction between the brand, branding, and the brand as a concept.
2 MARKETING COMMUNICATION (MC): Explores how integrated marketing communication functions and why it is essential to align all organizational stakeholders and internal processes to ensure a consistent brand message.
3 BUILDING STRONG BRANDS: Delves into the core concepts of brand identity, image, and differentiation, while introducing practical models for building strong brands and managing brand equity.
4 SERVICES AND BRANDS: Examines the specific challenges of branding in the service sector, highlighting the intangibility, inseparability, heterogeneity, and perishability of services and their implications for successful branding.
5 ANALYSIS OF FINANCIAL SUPPLIERS: Provides a comparative analysis of branding practices within the financial sector, using case studies of DaimlerChrysler Bank, Postbank, and Citibank to illustrate theoretical applications.
6 CONCLUSION: Summarizes the study’s findings, emphasizing the strategic necessity of a clear, unique brand identity and consistent communication to maintain competitiveness in the financial industry.
Keywords
Branding, Financial Sector, Brand Identity, Brand Image, Differentiation, Integrated Marketing Communication, Customer Loyalty, Customer Retention, Brand Equity, Services Branding, Relationship Banking, Corporate Communication, Competitive Advantage, Brand Value, Financial Institutions
Frequently Asked Questions
What is the primary focus of this work?
This work focuses on the importance of successful branding within the financial services sector, analyzing how banks can move beyond mere price-based competition to establish sustainable market positions.
What are the central thematic fields covered?
The core themes include branding theory, integrated marketing communication, the mechanics of brand differentiation, the creation of brand value and loyalty, and specific service-related branding challenges.
What is the central research question?
The primary research aim is to understand how financial institutions can improve their branding strategies to build strong relationships with customers, ensure brand consistency, and differentiate themselves in an increasingly crowded and volatile market.
Which scientific methods are employed?
The work utilizes a literature-based theoretical framework combined with a comparative analysis of empirical cases and existing brand ranking studies to evaluate the effectiveness of branding in German and international financial institutions.
What does the main body address?
The main body systematically explores definitions of branding, the role of employees as brand ambassadors, the transition to relationship-oriented banking, and practical tools like the 'Differ Model' and the 'Brand Identity System'.
Which keywords characterize the work?
The work is characterized by terms such as Brand Identity, Financial Services Branding, Differentiation, Relationship Banking, Corporate Communication, and Brand Loyalty.
How do German banks currently perform according to the analysis?
The analysis suggests that many German banks lack a clear, unique corporate identity and often fall into the 'brand image trap' by relying too heavily on temporary price advantages rather than emotional, trust-based differentiation.
What is the significance of the Citibank case study?
Citibank is presented as a successful benchmark, demonstrating how global consistency, deep customer orientation, and a strong internal communication strategy can foster high brand value and efficiency.
What is the 'Positive Vicious Circle' mentioned in the work?
It is a concept highlighting the interdependence of employee satisfaction, employee motivation, high service quality, and customer satisfaction, which ultimately leads to increased sales and long-term brand success.
- Quote paper
- Steffen Leditschke (Author), 2004, Successful Branding in the Financial Sector, Munich, GRIN Verlag, https://www.grin.com/document/38114
