Bank of America – Final Project
Bank of America – Final Project: Part 1 – General Information and Situational Analysis, Section 1 – Company Background, Describe your selected company or brand…
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Bank of America – Final Project
Paper details
Instructions
Part 1 – General Information and Situational Analysis
- Describe your selected company or brand.
- Tell a brief history of the company.
- Summarize the core products and services the company offers.
- Identify direct current competitors.
- Explain why they direct competitors.
Section 1 – Company Background
Section 2 – SWOT Analysis (Links to an external site.)
- Complete a SWOT analysis.
- Propose the product or service line you want to develop a marketing plan for.
- Justify your proposal with a SWOT-based argument for why it warrants marketing investment.
Section 3 – Macro- and Microenvironment
- Analyze at least two elements from each quadrant of Table 8.1 in the course text as the micro- and macroenvironment factors that affect the company’s overall marketing strategy.
Part 2 – The Marketing Plan
Section 1 – Segmentation, Targeting, and Positioning (STP)
- Describe your segmentation approach for your proposed product/service.
- Be sure to discuss these elements of the segmentation approach: demographic, geographic, behavioral, and psychographic segmentation approaches.
- Provide rationale for this approach.
- Describe the target audiences or markets.
- Create a positioning statement.
Section 2 – The Marketing Mix
- Formulate the 4Ps for your proposed product/service:
- Product
- Describe your core product, extended product, and the product concept.
- Explain how you plan to achieve competitive differentiation through creating customer value in four areas:
- Branding
- Packaging
- Support
- Quality
- Price
- Place
- Promotion with a special focus on digital media and integrated marketing communications (IMC)
- Product
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Section 3 – Global and Ethical Considerations, and Conclusion
- Identify three business or sociocultural considerations in translating your marketing plan for use in a foreign market.
- Discuss at least one policy/philosophy or idea regarding the company’s
- corporate social responsibility (CSR),
- green marketing practices, and
- ethics and ethical marketing.
- Conclude with a summary of your plan and why it deserves to be funded.
Solution
Part 1 – General Information and Situational Analysis
Section 1 – Company Background -Bank of America
Bank of America (BOA) stands out as one of the largest holding banks in the United States. The financial services and investment banking company provides a wide range of financial services and solutions to customers distributed across 150 countries. The wide global presence and consistent growth attained over the years make BOA one of the uniquely positioned companies in the banking and financial services sector.
However, the highly competitive financial industry necessitates innovation coupled with exemplary service delivery. BOA is already premised on ‘providing opportunities for all its customers, with its most significant segment of customers being enterprises and individuals (BOA, 2022). It is imperative to analyze BOA’s current positioning and identify the opportunities available for the bank to develop a competitive edge.
History of the Company
Bank of America dates to 1904, when Amadeo Peter Giannini opened the Bank of Italy in San Francisco (BOA, 2022). On the other hand, Orra E. Monette set up Bank of America LA in 1923 to serve the more conservative business leaders in Los Angeles. As a part of Bank of Italy’s growth strategy, Amadeo Peter Giannini made significant investments in Bank of America, leading to a merger under the name Bank of America. The bank quickly grew to have 453 banking offices across California by 1929 (BOA, 2022).
BOA grew rapidly through acquisitions, investments in the insurance sector, purchases, and expansion into other countries. Despite facing bankruptcy and takeovers in the 1980s due to bad debt to third world countries, BOA managed to rebound and, by 1992, was among the fastest-growing banks in the United States (Elmore, 2022). Bank of America has always strived for growth and to help the financial interest of its consumers.
Since its inception, BOA welcomed small borrowers and, as a result, gained popularity in the demographic. The rapid growth also allowed BOA to work with large companies starting with Walt Disney in the 1930S, to countries and large global corporations (Elmore, 2022). This financial institution is client-focused and strives to help clients grow their financial status by addressing today’s challenges.
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Core Products and Services
BOA offers numerous products and services such as investing options and advice for certain clients, credit cards, personal checking and savings accounts made at different dollar tiers to help meet the needs of different clients, home loans, auto loans, and business banking. Key services include mortgage loans, wealth management, investment banking, insurance, corporate banking, and consumer banking offered to 35 countries (Elmore, 2022).
The products and services delivered to global clientele have a net profit of $3.5 Billion as of 2020. Besides, the best-performing products and services are in the investment management, global wealth division, and the global marketing divisions, which have had an approximately 50% growth in the last five years (Elmore, 2022). BOA has over 213,000 employees with an estimated annual revenue of $91 billion (BOA, 2022).
Direct Current Competitors
The financial services and investment banking sectors are highly competitive. BOA, a financial institution, also has different direct competitors within the same demographic and markets. JPMorgan Chase, Citigroup, and Wells Fargo offer the same products and services and have a similar global presence, brand positioning, reputation, and asset base as BOA.
PNC, TD Bank, and many other financial institutions are also competitors of the bank. BOA tries to compete with these institutions by adding value to their clients in different ways, such as through customer service and how accessible the bank itself could be, which is highly important to retain the clients. Besides, the bank has a significant global presence, giving the company a slight competitive edge.
Section 2
SWOT analysis.
Strengths
BOA’s brand identity resonates with enterprises and individuals, giving the high bank value and a strong financial position. This makes the bank have a good financial position because it is very stable and will continue growing over time. Over the years, the bank has also built relationships with different crucial entities within America and globally, making it best suited to leverage the brand to attain growth (Elmore, 2022).
Besides, the financial services and investments banking sectors are stable and growing steadily. The sector’s growth gives BOA a steady ground to attain growth and venture into other markets globally (Majors, 2021). Furthermore, the bank has shown consistent growth, despite the drop during the Covid 19 pandemic (BOA, 2022).
The consistency increases the value of the bank to shareholders and customers while also improving the brand reputation of the bank in the financial services sector. Key to the consistent growth rate is the high innovation in the design of products and services and exemplary service delivery, which makes BOA one of the most innovative banks and its portfolio appealing to a wider demographic.
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Weaknesses
BOA has weaknesses that affect the company independently and some that hinder the financial services and investment banking sectors. One of the most prominent weaknesses of the company is lawsuits and controversies on credit cards and some of their mortgage products. For instance, the bank was compelled to pay $16.65 Billion in 2014 for violating the buyback mortgage costs (Majors, 2021).
Secondly, BOA has faced leaks and consumer credit controversies, which often adversely affect the company’s reputation. Besides, despite the large global expansion, 90% of BOA’s revenue comes from the American Market, only 10% across 149 countries (BOA, 2022). This hinders the profitability of the broadly spread resources and could act as a liability to the company’s positioning. Lastly, BOA has a reputation for high-interest rates, which also affects the consumer’s perception of the bank and limits the bank’s reach to different demographics (Hearit, 2018).
Opportunities
BOA has unique positionings that could facilitate its growth if correctly executed. If BOA continues to spread itself throughout other countries, it will create more opportunities because it would be diversifying itself even more. However, the spread has to be accompanied by the developing of products and services tailored to each region. Secondly, BOA should also continue to grow credit card value to their clients so that clients can find it more appealing to open a credit line with them instead of another institution.
Promoting efficiency, safety, and reliability in the credit card section could help BOA gain more value from the section. Since credit cards are directly utilized by consumers, BOA should work on building long-term relationships with users. One of the best opportunities is to target the users with informative products and resources to meet the demand for better products and services and fill the knowledge gap among users. Lastly, despite being an older bank, BOA can utilize its resources, brand reputation, and technology to develop innovative products for younger demographics, i.e., millennials and Generation Z.
Threats
BOA also actively faces threats related to the industry and its business. One of the key threats in cybersecurity and affiliated security breaches. As more users utilize online banking systems, the susceptibility of financial systems portrays the company as vulnerable and unstable. Secondly, BOA faces high competition and has to constantly find new products and services to keep up with its competition.
Hence BOA has to add new technology features and continue to provide services that outpace the other financial institutions. Lastly, the global financial landscape is volatile and is facing challenges affiliated with the 2020 global pandemic, such as non-performing loans (Majors, 2021). Non-performance of key business areas could adversely hinder the ability of the company to grow.
Proposed Service/Product
The proposed product is a package to improve the customers’ financial education among existing and new clients. The differentiating factor is the ease of sitting with an advisor and not feeling like the client needs a certain dollar amount in their bank accounts to qualify for this service. The product concept is that BOA helps clients reach their financial goals and create healthy financial habits. The product is tied to a wide range of personalized products such as access home lending, auto lending, credit cards, and how to borrow responsibly.
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Justification
From the SWOT analysis and the opportunities for BOA, theirs is a gap in informative and interactive relationships between the bank and its clients. The service aims to utilize the broad customer base of BOA, the good brand identity, its innovation, and the opportunity within the credit cards section to increase the value of new and existing customers to BOA.
Subsequently, The service aims to build long-term relationships with clients and provide informative platforms for one-on-one interactions with the bank. While the product would offer value through the funnel of services available for a client, it also increases the value of each customer to the institution.
The product is a service line where BOA teaches all their clients healthy financial patterns by having them sit down with a banker and financial planner/advisor. The goal would be when opening an account; you have the option to meet with both individuals to help you reach your financial goals and help create healthy habits.
In doing this, we would check in on clients quarterly by scheduling a phone, zoom, or in-person meeting to ensure that the clients are on track and help the client get on track if they derail. We would help pay for this resource by adding to the monthly service fee an additional $5.
Section 3 – Macro- and Microenvironment
Macro Factors –
Economic factors
Within the financial services sector, economic factors have a significant influence on the performance and strategies of the company. Furthermore, with BOA spread across 150 countries and made significant investments in 35 of them, it is vulnerable to volatile global economic conditions.
For instance, the global covid-19 pandemic affected the bank’s revenues due to non-performing loans and the limited financial delivery framework. Such local and global economic factors affect the organization’s marketing strategies and spending while also influencing the consumer’s decision-making process.
Technological Factors
Marketing also relies on technological factors that influence production and service delivery. Factors related to financial systems security and innovation in service delivery can significantly affect the company’s ability to reach its intended market segment and appeal to new demographics.
Micro factors
Competitors
Competitors play a significant role in shaping the marketing structures of the financial services industry (White, 2012). The innovation, design, and marketing of different products and services by competitors would play a critical role in shaping the approach used by BOA. The marketing message has to value the products and services delivered by BOA distinctively. This would provide BOA with a competitive edge and a better consumer retention strategy.
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Customers
Products and services have to be structured to meet the demands of customers. Under this framework, BOA’s priority is to understand the customer’s needs and tailor the product to meet these needs (White, 2012). The marketing structure should convey the product’s differentiation to the customers and its value. Furthermore, understanding the market ensures the company finds the best way to reach and appeal to customers.
Part 2 – Marketing Plan
Section 1 – Segmentation, Targeting, and Positioning (STP)
Segmentation Approach
The customer segmentation process will entail dividing customers into various groups according to attributes in their data, including purchasing behavior, psychological traits, interests, habits, employment type, and income. Understanding these details will help communicate with the customers effectively and provide products and services that are more likely to excite them (Lee, 2021).
The process includes geographic, demographic, psychographic, and behavioral segmentation to help develop an accurate banking customer buyer persona that will drive client engagement and faster sales. The segmentation approach is data-driven, involving wealthy screening of consumer information to accelerate marketing efforts.
Segmenting Consumer Market
Demographic Segmentation
Demographic segmentation will be the primary basis of marketing strategies. It revolves around demographics (age, gender, income, geographic location, education, and other factors). The product will target both men and women. The bank will introduce particular services for women to accommodate women’s increased knowledge of banking services in recent societal developments.
Age is a crucial factor in demographic segmentation because people in the same age group exhibit similar buying behavior and may have the same needs for financial services. There will be a specific financial education approach for school children, university students (needing education loans with less interest and overdraft facilities), first time workers and adults (requiring credit and long-term residential loans), and the aging population (needing saving accounts with high interest and pension and retirement plans).
Geographic Segmentation
Geographic segmentation is valuable for banking products and services because banks cannot serve entire areas (Rizzo, 2016). Geographic segmentation will entail regional segmentation based on countries, cities, states, towns, and specific regions in these areas. It will also consider the size of the population. Density segmentation will help determine where to locate the product in urban, suburban, and rural areas and how to enhance accessibility, availability, and approachability.
Behavioral Segmentation
Behavioral segmentation divides customers according to their knowledge, attitudes, uses, and responses to the offered products (Rizzo, 2016). It will involve a tactical evaluation of credit data, data from ACH, propensity models, credit card transactions, and online banking. This information will help introduce strategies for targeted financial education approaches to promote the product and its value to consumers.
Psychographic Segmentation
Psychographic segmentation entails diving buyers into various groups according to their social class, lifestyle, and personality traits (Rizzo, 2016). Psychographic data will help define why the consumers do what they do, which will help the bank develop appropriate marketing strategies to win consumer trust.
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For instance, low-income earners need investment aid to enhance their income, and higher social classes tend to have saved aspirations. Both groups need different financial education, and this segmentation will help develop educative content based on the specific needs of a particular segment.
The Rationale for the Approach
This approach comprises the various consumer categories the bank considers vital for its marketing efforts. It identifies the categories that mainly identify with the bank and those where the bank needs to channel its efforts towards covering wider markets and increasing market share. The approach will offer better customer insights and identify segments and opportunities to provide a better customer experience. The data collected from each category will develop strategies to improve customer loyalty and retention and promote precise targeting in the marketing funnel.
Target Audience and Markets
The product targets various audiences and markets based on their specific needs. The consumer segmentation will be used to develop targeted marketing to ensure the product addresses the various needs of the different segments. Target audiences and markets for the product include low-income earners in need of investment aid, first-time workers and young adults in need of long-term residential loans, higher-income earners with saving aspirations, women in need of high-interest saving accounts, and low-interest loans, and students in need of education loans.
The product targets companies or capital markets requiring corporate loans, merger and acquisition aid, and sales and trading assistance. The product also targets underserved populations like people in rural areas, the aging population in need of pension and retirement plans, and people with disabilities requiring financial assistance to invest.
Positioning Statement
The target audience and markets engage in financial transactions in different ways, and some need financial aid while others have saving aspirations. The proposed product is the client’s financial education. Financial education is critical to achieving financial health through informed decisions. Financial education will help clients reach their financial goals and create healthy financial habits, such as borrowing responsibly. It will allow them to be better informed when they access more products and services, including home lending, auto lending, credit cards, and education loans.
Section 2 – The Marketing Mix
The 4Ps
Product
The core product is the client’s financial education, and the extended product is the ease of sitting with an advisor to seek financial advice. The clients will not pay to qualify for this service or access financial education. The product concept is that if we help clients reach their financial goals and create healthy financial habits, they will get more of our products, such as other services we offer, such as home lending, auto lending, credit cards, and how to borrow responsibly.
Creating competitive advantage through:
Branding
The product will utilize branding to distinguish itself from competitors uniquely, relevant, and appropriate to our target audience and markets. The brand design will enhance the perception of the product’s value, consistent communication with customers, and establish relevant, captivating multi-channel marketing. Financial education as a brand will ensure it highlights the value to customers and reasons to trust insights provided by the financial advisors involved.
Packaging
The product packaging will indicate the differentiation aspects and comparable value to customers, such as performing activities efficiently and serving informed clients. The product packaging will include elements such as green advertising, demonstrate innovativeness in the design, and communicate customer value.
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Support
Customer support services will help the bank gain a competitive advantage. Client financial education itself is a form of support to ensure the bank serves informed customers, and any financial engagement will benefit the bank and its clients. Customer support emphasizes customer satisfaction, and it will be available throughout. Automatic reply technology on the bank’s website will help ensure customer support during non-working hours.
Quality
The products will demonstrate quality through acts of innovation, including adopting new technologies to enhance the quality of service. Delivering quality products increases customer satisfaction, which will help gain a competitive advantage.
Price
The pricing strategy will ensure that customers enjoy the value of the products and services offered. Low-cost and value-based pricing strategies will be the center of our pricing. The customers will not pay for financial education. The objective is to ensure clients are more informed when using our other banking products and services. They will be more willing to use other products and services with better information. They are most likely to place a higher value on other products and services.
Place
The product will be available in any location where customers can access it, including the bank’s website and branches, if a physical meeting with a financial advisor is more appropriate. Clients can access the product through their mobile devices and if they have internet connectivity. They can also access it via mobile numbers. The product will be placed in all locations to be more visible and approachable.
Promotion
The primary objective of the product promotion is to attract new customers and encourage existing customers to engage with it. The website will be the client’s primary touchpoint. Product promotion will also include email marketing, mobile marketing, explainer videos, and through the bank’s YouTube channel.
The product will also be promoted through blogging, social media content across Facebook, Instagram, Twitter, customer service, strategic partnership, and digital signage. Promotion efforts will adopt integrated marketing communication, unifying public relations, advertising, audience analytics, and social media.
Section 3 – Global and Ethical Considerations
When translating financial education in foreign markets, it is crucial to consider the culture, language, religion, education levels, customer preferences, and society’s attitude towards the bank’s foreign products and services. According to Triplett III (2018), culture, language, attitudes, and customer preferences play a critical role in the bank’s community operations, including how it will approach customer engagement, how it will sell the product to the customers, and how it will select methods of communication for financial education.
Corporate Social Responsibility (CRS)
Our bank is socially responsible, and it attempts to manage our banking activities with integrity, holding itself accountable to stakeholders regarding issues like environmental performance, sustainability, and other social problems. Engaging in CRS is to build customer trust, provide a positive customer outreach, and boost employee productivity and engagement. CRS activities can include volunteering in charity, building playgrounds, weeding local community gardens, and offering scholarships
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Green Marketing Practices
The bank engages in green banking practices, promoting environment-friendly practices and minimizing carbon footprints from daily banking activities. The objective is to improve the bank’s standards and impact socially responsible behavior. The product marketing and promotion will adopt practices that communicate the real or perceived product’s environmental sustainability.
Ethics and Ethical marketing
Practices created to market and promote clients’ financial education will focus on how it will benefit consumers and also how it will promote social and environmental responsibility. Marketing practices will foster fairness and honesty in all advertisements and promotions. They will also protect vulnerable populations, especially children and the elderly, through targeted marketing and avoiding deceptive information or making the product something more than it is.
Conclusion
The product targets individuals in different geographical regions, including rural areas, of all ages, income statuses, social statuses, and capital markets. The purpose of creating the product is to help clients achieve their financial goals by helping them develop healthy financial habits, like borrowing responsibly and investing wisely. Financial literacy will help clients be financially sustainable and engage with other of our products, including house lending and investment loans, better informed. Educating clients to be financially responsible can increase our bank practice’s customer base, loyalty, and trust. Therefore, investing in the clients’ financial education is worth it.
References
- Triplett III, R. L. (2018). Understanding how culture drives a bank’s mission. Consumer Compliance Outlook. https://consumercomplianceoutlook.org/2018/first-issue/understanding-how-culture-drives-a-banks-mission/
- BOA (2022) Driving Responsible Growth— now and going forward- https://d1io3yog0oux5.cloudfront.net/_94d58bbdd19739240e7868d5058bc760/bankofamerica/db/867/9640/annual_report/BAC_AR21_Full_Report_030122+%281%29.pdf
- Hearit, L. B. (2018). JPMorgan Chase, Bank of America, Wells Fargo, and the financial crisis of 2008. International Journal of Business Communication, 55(2), 237-260.
- Elmore, B. J. (2022). The Environmental History of an American Bank. Environmental History, 27(1), 000-000.
- White, S. (2012). Principles of marketing (2nd ed.). Bridgepoint Education, Inc. This text is a Constellation™ course digital materials (CDM) title.
- Rizzo, T. (2016, July). 4 methods of segmentation. ABA Banking Journal. https://bankingjournal.aba.com/2016/07/4-methods-segmentation/
- Lee, H. (2021, August). Customer segmentation for banks and credit unions. https://www.dataoceans.com/customer-segmentation-for-banks-and-credit-unions/
- Majors, H. (2021). Bank of America, May 4th, 2021.
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