Kotler Pom 6ce Compcase

8/3/2019 Kotler Pom 6ce Compcase

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Branding Metro Credit Union

On 5 May 2000, Larry Gordon, vice-president of development of Metro CreditUnion (MCU), sat in his office overlooking Browns Line in Etobicoke and won-dered how he could develop a break-through branding strategy for the company.Larry knew that MCU offered its members many benefits as a banking alternative;however, MCU had not clearly established what it stood for in the minds of itscurrent or potential members. In the past, it had focused on marketing its specificproducts and services, and although it had its own brand symbola capital Minside a box (see Exhibit 1), Larry realized that MCU hadnt developed a brandthat communicated everything it stood for.

In late 1999, the senior management team formally adopted a retail valueproposition (RVP) on which to base its future development (see Exhibit 2). How-ever, even with this RVP, they didnt know exactly how MCU should differentiate

itself. While MCU was moving to restructure its operation to become more cus-tomer centred to improve service quality, Larry knew that its competitors weredoing likewise. However, MCUs additional focus on accountability to consumersand communities, which was anchored by its member-ownership and democraticcontrol structure, was quite distinctive, as was MCUs corporate commitment tosocial responsibility. He wondered if this aspect of the firm could be used as thefoundation of the core brand message.

Market research from 1999 appeared to reinforce this position. Members whohad joined in the previous three years had been asked why they had consideredMCU. Traditional consumer choice factors were evident: convenience (10%), rec-ommendations (14%), products or prices (18%). But, most interesting, 38 percentreported that credit union philosophy or bank alternative were their primary

reasons for joining MCU.

Comprehensive Cases 793

This case was prepared by Phil Connell under the supervision of Dr. Peggy Cunningham for use inthe Inter-Collegiate Business Competition and is not intended to illustrate either effective or ineffec-tive handling of a management situation. Some information may have been disguised in the interestof confidentiality. We thank Larry Gordon of Metro Credit Union for his help and support in develop-ing this case.

Copyright, Queens University School of Business, 2000

EXHIBIT 1 MetroCredit Union logo


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Larry also thought that MCUs commitment to providing helpful and objec-tive advice to members, through both direct consulting services and educationalprograms, could be part of the branding strategy. MCU advised both individualsand small businesses on a number of issues, from investment and insurance prod-ucts to automobile purchases. In addition, MCU had plans to launch a series ofeducational seminars for members on a variety of financial planning and other top-ics, particularly on issues or for groups that were not well served (e.g., sociallyresponsible investment seminars, financial planning for single parents).

While any of these facets of Metros services could be used as a foundation onwhich to build brand image, Larry wondered which would be the most powerfulfor a successful brand. He knew that MCU would have to assure consumers thata credit union was just as professional, secure, and able to offer state-of-the-artfinancial services, as a major bank. At the same time, he knew that MCU wouldhave to offer benefits that were not available from large traditional banks.

Before he could decide on a brand positioning strategy, Larry first had to decidewhom to target. The MCU proposition, he realized, was not for everyone. MCUknew it would have to be a niche player. Larry was concerned that having multi-ple messages aimed at multiple targets would result in brand confusion. Tradi-tionally, MCUs customers were older, educated individuals and small businesses.But Larry was aware that the non-profit sector was under-targeted by financial ser-

vice providers. He believed that many non-profit organizations in Toronto, alongwith their employees and supporters, would welcome a committed financial insti-tution to support them. And this would be consistent with the credit union phi-losophy of serving the community.

Finally, there was the question of how to communicate the new brand to cur-rent and potential members. Unfortunately, with a total marketing budgetforagencies, market research, advertising, and promotionof only $450 000, Larryknew he couldnt afford advertising on TV, radio, and daily newspaper ads inToronto (see Exhibit 3). He knew MCU would have to rely on highly targeted pro-motional outreach, special offers and events, direct marketing, and word of mouth,supplemented by targeted advertising in weeklies or special interest publications.

Appendix794

EXHIBIT 2 MCUs Retail Value Proposition

Retail Value Proposition (RVP)

The primary element in our RVP is the distinctive Metro customer experience, which is based onaccountability (i.e., co-op membership) and high quality service.

While remaining anchored in financial services, we will move beyond banking to meet the needs of our

members and their communities.

Related Strategic Issues

We will ensure the delivery of quality service by developing a member-centriccorporate structure andoperation.

We will be a niche player focused on specific market segments (to be identified) where we are mostlikely to present a competitive advantage.

We will offer in-house and brokered products and services, as appropriate, to meet the needs of ourtarget markets.

Our diversification programwill take place through a combination of developing new inhouse offer-ings, incorporating subsidiaries, and/or forming strategic alliances that:

1) complement our core financial services, and/or

2) support our branding strategy, and/or

3) build on our internal expertise, and/or4) generate revenue to support the overall corporate operation.


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Larry shook his head. How was he going to synthesize all of this informationinto a single brand positioning strategy and program that would clearly commu-nicate what MCU was all about?

The Financial Services Industry

Overview

Canada was renowned for having an efficient, low-cost financial services industry.For many years, it was a relatively stable industry due to strict government regu-lation. Today, many believe it is entering an era of hypercompetitionan industrystage defined by economies of scale and the war for customers.

The dominant force in the Canadian financial services industry is the Big FivebanksRoyal Bank, CIBC, Bank of Montreal, TD Bank, and Bank of Nova Sco-tia, accounting for about 85 percent of the banking market in Canada. The BigFive along with a number of smaller banks employ 221 000 people, whereas credit

unions employ about 20 000. In addition, banks operate 8211 branches and 15481 automated teller machines (ATMs).

Currently, there are about 750 credit unions in Canada. Many of these havemultiple branches. Credit unions and caisses populaires, the Quebec version ofcredit unions, have a total membership of over 10 million people. However, whilemembership is increasing, the number of credit unions is decreasing: For example,in Ontario there are now only 350 credit unions; just a few years ago, there were500. This is a result of an increased number of mergers and acquisitions amongcredit unions so that they can better compete with the large banks.

Other competitors are mutual fund companies, which have been expandingaggressively: In 1999, close to 40 percent of Canadians made mutual fund invest-


EXHIBIT 3 Media and Advertising Costs

Prime Time Television Commercial Rates (30 seconds)1

Network Number of Stations Basic Average Cost

Regional television

ASN 1 $ 90

ATV 4 $ 650

CBC Regional

Atlantic 5 $1000

Central 15 $6000

Western 12 $2500

Pacific 6 $1000

Global 1 $7000

MITV 2 $ 500

BBS Ontario 8 $5000

Newspaper Advertising2

Newspaper Cost of Advertisement Cost per 1000 People Reached (CPM)

Toronto Star $11 340 $2438

Globe and Mail $16 938 $5314

Toronto Sun $ 5 463 $2366


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ments compared with the 14.9 percent who did in 1991. Over 20 percent of Cana-dians also own stocks and bonds; 33 percent own GICs or term deposits, and 22percent own Canada savings bonds or term deposits. With the new online stocktrading, the percentage of people owning stocks is expected to increase. This isoccurring at a time when the percentage of people having savings accounts is drop-ping. In 1999, 73.3 percent of people had a savings account compared with 76.6

percent only a year earlier.Finally, a number of non-traditional players are entering the financial services

market to compete with both banks and credit unions. The Bank Actdoes not reg-ulate these organizations. For example, such large manufacturers as GeneralMotors and General Electric and such retailers as Loblaws, Sears, and CanadianTire are all offering a range of financial products. They compete for customers andmembers with loan and mortgage companies, life and health insurance firms, pen-sion funds, and mutual fund providers. Furthermore, a number of categorykillers are coming into the marketplace, including American credit card compa-nies MBNA and First USA.

Industry Segmentation

Canadas financial service providers market to four broad categories of customers:retail, commercial and corporate, investment, and international.

The Retail Market: The financial needs of consumers have been changingrapidly. Today, Canadians expect information, choice, and convenience from retailfinancial institutions. They are aware of the trends in the marketplace and are quickto adapt to them. For example, 87 percent of Canadian consumers believe that itis important to have a good understanding of how the economy functions for thepurposes of financial planning. Furthermore, 67 percent believe that having a bet-ter understanding of how the economy functions could actually improve economicconditions.3 There are many financial services and products from which they canchoose, and multiple channels in which they can perform their transactions. Finan-cial service providers are becoming more aware of the need to segment the mar-ketplace to address the needs of specific groups. For example, education loans aretargeted to university and college students and their families, loans for mortgagesare targeted to young families; RRSPs are aimed at people in their peak earningyears (45 to 55 years of age); and wealth management products are designed tomeet the needs of people aged 55 to 65.

The Commercial and Corporate Market: As with the retail market, commer-cial and corporate clients of the financial institutions are being offered more choicein financial products and services. These include credit products and services suchas risk management, cash management, and payroll services. Financial institutionsprovide businesses with working capital as well as funds to support capital pro-jects and export operations. Small and medium-sized enterprises (SMEs) make upthe majority of firms in this marketplace. Industry Canada works with members

of the financial sector to inform small business owners of the various sources andtypes of funding available.

The Investment Market: There are financial products and services for end-consumers, corporations, and public-sector organizations within this segment ofthe market. Individual Canadians are offered investment products by a variety offinancial institutions, from banks and credit unions to mutual fund firms andstockbrokers. They can choose among stocks, bonds, fixed-return products (suchas GICs), and derivatives. Many Canadians put their savings into mutual fundsinstead of relying on savings accounts and government savings bonds. Mutual fundcompanies manage about 66 percent of these assets, while banks manage about26 percent.

The International Market: Many financial institutions also export their finan-

Appendix796


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cial services. Increasingly, the ability to be a player on the world stage is the ratio-nale used to lobby for recent mergers among the big banks. Products and servicesoffered internationally include collection services, foreign exchange, travellerscheques, commercial letters of credit, and risk management.

The Technological EnvironmentTechnological changes affect every aspect of the financial services industry. Tech-nology has empowered buyers who can now access a world of information withthe click of a mouse. This has lowered members switching costs if they are inter-ested in the services of a competitor. Credit is now portable, and buyers no longerhave to belong to a financial institution to be credit worthy. Technology has alsoaffected the economics of financial institutions, allowing many to lower their costsand increase their revenues.

Technology has created new channels for service delivery. While the branch isstill an important distribution channel in the retail sector, more people are usingsuch self-service channels as ATMs and telephone and computer transactions. Infact, Canada has the highest use of ATMs and smart cards of any country in the

world. Furthermore, the Bank of Montreal forecasts that by the end of the year2000, almost 30 percent of bank profits will be derived from Internet bankinghouseholds. Technology has enabled the use of credit and debit cards, two verypopular options with Canadians.

Accelerating technological change has affected credit union operations in sev-eral ways. It has increased efficiency and created alternative distribution systems.For example, ATMs and debit cards have increased member access to services atmultiple distribution points. Technology has also changed buyer behaviour: Toreceive certain products, such as credit cards, many consumers are happy to usesuch direct means as the mail. However, for mortgages and loans, they want topersonally interact with a service provider. Desire for personal service varies bycustomer segment, however. Younger (under 35), more affluent people with highereducation are more likely to deal with a financial institution using the direct meansof online banking and ATMs.

In this era of rapid technological change, Larry thinks that building a strongbrand is of growing importance. In an era of less personal interaction betweenpeople and their financial institution, having a brand that speaks to members andpotential members is critical.

Metro Credit Union

Metro Credit Union was founded in 1949 as the University of Toronto employ-ees credit union. Over the years, it has merged with and acquired other creditunions that have served teachers, health care workers, and workers in various

other industries. Since the 1980s, MCU has been open to the general public.Today, MCU is a mid-sized credit union, serving over 44 000 member-

owners in the Greater Toronto Area (GTA) through 10 different branches. Whilemost of MCUs members are individual consumers or households, about 3000 aresmall businesses and community organizations. MCU has over $400 million inassets, and $100 million assets under administration, that is mutual funds. Underits current by-laws, MCU may serve only customers within the GTA, though upto three percent of the membership may come from outside that area. Provincialregulators would have to approve any expanded service area. MCU is the largestcredit union focused exclusively on the GTA.

Certain trends have emerged in MCUs growth. Loans to small businesses havegrown rapidly, so rapidly that the MCU never needed to advertise. MCU, how-



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ever, will soon reach the limit on how much of its portfolio it can have in com-mercial loan assets. For the first time in years, the personal loan portfolio is alsogrowing, largely because of market-leading rates for car loans. The residentialmortgage portfolio, on the other hand, is stagnating due to intense rate competi-tion in the market. Total personal deposits are not growing, as individuals shiftsome of their deposits to mutual funds. MCU is experiencing significant deposit

growth, however, from its 1000 non-profit organizational members. Mutual fundsales are also growing significantly.Most credit unions are similar to banks in that they offer a full range of finan-

cial products and services, including chequing and savings accounts, personalloans, mortgages, RRSPs, RRIFs, Internet banking, automated telephone banking,and financial planning, and have investment and insurance services availablethrough affiliated suppliers. In addition to its standard financial services, MCUalso offers automobile advisory services, car purchase services, and distinctive con-sumer education seminars (see Exhibit 4 for a list of all MCUs service and prod-uct offerings).

Credit unions differ from banks in that they are financial cooperative whosecustomers are both members and owners: In fact, credit unions refer to customersas members. The member-owners democratically control the credit union by elect-ing the board of directors at the annual general meeting. MCU prides itself onhaving the largest annual meeting of any financial institution in Canada, generallywith 900 to 1000 attendees. Although MCUs membership is diverse, it is largelycomposed of highly educated and older individuals (see Exhibit 5 for MCUs orga-nizational structure).

Appendix798

EXHIBIT 4 MCUs Service and Product Offerings

Telephone banking

PC banking

Tele-service centre

Payroll deposit Premium savings

Regular chequing

Daily interest chequing

US $ savings/chequing

Flat-fee chequing packages

14 cash machines

ATM/debit card

Interac direct payment

Interac and PLUS networks

Personal loans

Personal lines of credit

Car leasing

Car loans

Business accounts

Business loans

Business lines of credit

First and second residential mortgages

Reverse mortgages

Home equity lines of credit

Multi-option mortgage

RRSPs

Financial education seminars

Term deposits

Index-linked term deposits

Canada Savings Bonds

Seniors package Childrens account

Electronic bill payment

Travellers cheques/insurance

Foreign exchange

Money orders and drafts

Safety deposit boxes

Club accounts

Organization accounts

MasterCard

Gold MasterCard

Car Facts Centre

AutoBuy car purchasing services

Loss of job mortgage insurance

Credit insurance

Home insurance

Term life insurance

Auto insurance

RRIFs

Over 600 mutual funds

Socially responsible mutual funds

Financial planning


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Membership, Fees, and Financial PerformanceMember Shares

Although a credit unions customers are also its owners, investment in the creditunion is unlike an investment in a publicly traded corporation, as the values ofowners shares do not fluctuate over time.

To join MCU, members are required to make an initial investment of $5.Through a specified formula, their investment must gradually increase to $125over a period of five to nine years. Membership shares cannot be redeemed untilthe owners close their accounts with MCU. Members may receive an annual div-idend on their investment.

Fees

In general, the fee structure of financial institutions varies according to the typeof account, the number of different transactions that a customer typically makes,and the way in which they conduct transactionsbranch banking, telephone bank-ing, Internet banking, ATM. The fee structure of MCU is no exception.

In general, MCU maintains relatively low to average fees for most standardtransactions. However, it is about to introduce a new fee schedule with severaldistinctive features. MCU will be eliminating fees for use of its 10 ATMs for allmembers, regardless of their account balances, transaction volumes, and numberof accounts. In addition, it will be introducing a relationship pricing benefit: Anymember household with a total banking relationshipall deposits and loans

exceeding $75 000 will also have unlimited free Interac ATM service, as well asfree chequing and Interac direct payment services for all members of that house-hold. MCU expects both of these offers to be popular with current members andattractive to those who may consider joining MCU. The credit union hopes thatlatter relationship pricing benefit will help counter the accessibility problem in hav-ing only 10 branches in the GTA.

Financial Performance

The 1999 fiscal year was very successful for MCU: Total assets grew by 4.8 per-cent, deposits by 7.3 percent, and loans by 2.2 percent. Earnings before interestand taxes were $1 594 249 (see Exhibits 6 and 7 for balance sheet and income

statement). Given 1999s healthy financial performance, the board of directors


Members

Democratically elect

Hires

Hires

Board of Directors

Management and Staff

Chief Executive Officer(CEO)

EXHIBIT 5 Companystructure


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announced a five percent dividend on shares. Over recent years, the most signifi-cant area of growth occurred in the investment services area: Assets under admin-

istrationmostly member mutual fund investmentsgrew by 63 percent. In total,MCUs income increased by 119 percent.MCU is very clear about how its profits are earned and distributed. Like all

credit unions, it operates under the philosophy that its profits are member prof-its. Since credit unions are member owned, all of the profits are returned to mem-bers in the form of improved services, financial reserves, dividends, or communitydonations. This is in sharp contrast to what the Big Five banks do with their prof-its, which were over $9 billion in 1999.

MCUs Distinctive Offerings

As a socially responsible, community-owned, democratically controlled financialinstitution, MCU presents a distinctive, accountable, and high-quality alternativeto consumers, small businesses, and organizations. It also offers its members someproducts and services that differentiate it from its rivals.

Beyond Banking: Car Facts Centerand AutoBuy

Car purchasing is a major financial decision for consumers, most of whom are notprepared to make well-informed decisions in their own interest. Car Facts, whichis used by about 1000 members each year, is a free advisory service for all MCU

Appendix800

EXHIBIT 6 MCU Balance Sheet

Metro Credit Union Limited

Balance Sheet(March 31, 1999)

Assets March 31, 1999 April 1, 1998Cash resources $ 7 670 767 $ 4 645 813Loans to members 311 322 592 304 603 478Investments 38 906 855 33 220 946Capital assets 5 366 920 4 287 428Other assets 4 755 588 4 489 112

368 022 722 351 246 777

LiabilitiesMembers deposits 339 767 349 316 783 382Operating loan 7 000 000Other liabilities 4 878 114 5 317 970

344 645 463 329 101 352

Liabilities qualifying as regulatory capitalClass A investment shares 7 672 970 7 222 214Class B bonus shares 741 498 609 893Membership shares 4 000 063 4 544 451

12 414 531 12 376 558

Total liabilities 357 059 994 341 477 910

Members equityRetained earnings 10 962 728 9 768 867

368 022 722 351 246 777


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EXHIBIT 7 MCU Income Statement

Metro Credit Union Limited

Statement of Earnings and Retained Earnings(Year ended March 31, 1999)

Revenue 1999Interest on loans:Residential mortgage loans and home equity lines of credit 14 112 802Personal loans and lines of credit 6 549 219Commercial loans and mortgages 1 778 080Investment income 1 635 557Other income 3 966 920Other assets

28 042 578

Financial expensesInterest on members deposits:Demand deposits 837 963Term deposits 3 890 735Registered savings plans 4 901 940

Registered income funds 1 255 136Dividend on Class A Investment shares 505 555Dividend on Class B bonus shares 27 685Dividend on membership shares 127 870Interest on external borrowings 162 813

11 709 697

Operating margin 16 332 881

ExpensesAmortization of capital assets 991 497Amortization of goodwil 27 560Data processing costs 1 194 242Deposit insurance premium 688 848General and administration 2 979 225Occupancy 1 635 957

Provision for impaired loans 111 063Salaries and benefits 7 046 083Loss on disposal of capital asset 64 157

14 738 632

Earnings before income taxes 1 594 249

Income taxesCurrent 413 724Deferred 13 336

400 388

Net earnings 1 193 861

Retained earnings, beginning of year 9 768 867

Retained earnings, end of year 10 962 728

members considering the purchase or lease of a new car. A Car Facts advisor pro-vides all the information and advice a member purchasing a car could need, includ-ing financial and non-financial information. The former may include which deal-ers are providing the best deals or how to finance a purchase at the lowest rates.The latter may include actual information about different vehicles that a dealermay be reluctant to reveal. The AutoBuy program goes one step further. On a fee-for-service basis, the AutoBuy advisor shops for the car for the member, doing allthe legwork and getting the best deal on the desired car.


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Socially Responsible Investment Centre

Like other financial institutions, MCU offers a full range of investment and mutualfund services. Its point of differentiation is in its being one of the largest Ontarioretail centres for the sale of socially responsible mutual funds. The national creditunion system owns the family of Ethical Funds, the largest and most successfulsocially responsible funds in Canada. This family is considered the MCU housebrand mutual fund.

MCUs financial advisory service department provides members with free per-sonalized financial planning, financial education seminars, and direct assistancewith investments. As well, branch staff also serve as investment advisors to assistmembers with basic investment planning and mutual fund purchases. However,despite MCUs sales of socially responsible mutual funds, it does not have a sin-gle specialist in this field, which may be a shortcoming in the future.

Fair Pricing Policy

MCU is one of only two financial institutions in Canada that have formalized afair pricing, or rate guarantee, policy which guarantees that the best rates are auto-matically applied to qualified members. This policy stipulates that any two mem-bers meeting the same criteria will pay the same price for services. For example,all members who maintain a certain balance in their accounts or purchase a cer-tain number of products or services will be offered the same rate on a new loan.Effectively, this means that members should not have to question staff and servicepersonnel about the best offer. There are no hidden deals in their product mixthat are offered to one type of member that are not offered to all people inthis class.

While MCU is very proud of this policy, it has both advantages and disad-vantages in its business. The upside is that it clearly illustrates a business rela-tionship based on trust and integrity. As a part-owner of the business, the mem-ber should expect nothing less. This characteristic will appeal to some consumers.

The downside is that MCU is vulnerable with other consumers. In a market inwhich rates are often negotiated, the more aggressive, better-educated consumerscan sometimes walk across the street and get a slightly better rate from a com-petitor. MCU will disclose and apply its best rate upfront, where other institutionswill more selectively disclose and apply their best rates and selectively one-up thecompetition. As a result, the policy most likely helps to retain some business, whileother business is lost. After extensively reviewing the pros and cons of this policy,MCU remains committed to it, as both the right thing to do and a marketing strat-egy that helps ensure that pricing benefits are going to the bestloyal, long-termcustomers. Larry believed the policy was part of a package of values benefits pro-vided by MCU to its members, but was less certain that it could be a majorcomponent of MCUs marketing strategy.

Trusted versus Accountable Advisor

Larry believed that its services helped present Metro as a consumer-oriented,consumer-driven and consumer-owned, beyond-banking company. In fact, hethought that promoting MCU as the trusted advisor or the cooperative advi-sor could be an excellent strategy. However, this idea was not without contro-versy. Senior management had discussed the internal conflict inherent in being bothan advice-giving intermediary and a product-selling organization. For example, ifa member paid the AutoBuy advisor to find the lowest cost deal and the advi-sor found low-cost dealer financing, MCU could lose a loan. Likewise, an invest-

Appendix802


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ment advisor might tell a member to take deposits out of the MCU and put themin external investments, which would provide much lower return for MCU. In bothcases, MCU hoped to strengthen a profitable long-term relationship, but sometimesat a short-term cost. At this time, however, MCU management had held back fromusing trusted advisor as the central point in the retail value proposition, insteadfocusing on the concept of credit union accountability to members.

New MCU Branch at Bay and College

In September 2000, MCU would be launching a major initiative that it expectedwould dramatically increase its exposure to the Toronto community. It was open-ing a new branch on the corner of Bay and College Streets in Toronto to be anew showcase service centre. It was to become a high-profile symbol of thenew Metro Credit Union, and it would make MCU the first credit union onBay Street, right around the corporate offices of the Big Five banks.

The new branch design incorporated leading-edge retailing concepts. Design-ers were given the mandate to create a branch that looked nothing like a bank.The result: an exterior dominated by two large video screens, one facing Bay

Street, the other facing College. The video boards would broadcast an eclecticrange of visuals, statements and photos about the Credit Union, membership ben-efits, and special offers. MCU hoped the video boards would become the focalpoint of this very busy intersection, which 10 500 pedestrians and 21 100 vehi-cles cross daily.

Inside, the branch would display such things as the history of MCU with cre-ative storyboards and imagery. A member information board would display post-ings by and for members. An expanded Car Facts Center would be stocked withhelpful books, brochures, and a service specialist. There would be a WelcomeNew Members area so that existing members could avoid what MCU hopes tobe a very busy part of the branch. There would be a Member Education Centrewith easy chairs and many books and pamphlets, newspapers, magazines, and

videos with helpful consumer financial planning information. The waiting linewould feature reading material to reduce the monotony of being in a line-up. Afull-size caf would feature live music and lunch seminars on financial planningand other interesting topics.

Larry Gordon and the rest of the management team were very excited aboutthe grand opening in the fall. They intended that the new facility be part of aprogressive, happening urban scene. Larry had no doubt that developing abranding strategy that could be rolled out at the same time as the opening of thenew branch would increase Metros presence in the Toronto marketplace.

Social Responsibility at MCU

Since its inception, MCU has been committed to social responsibility, manifestedthrough a number of initiatives.

Social Audits

MCU is a pioneer in the social audit process, which assesses how well an organiza-tion is meeting its objectives in regard to social responsibility and member, commu-nity, and employee relations. To its knowledge, MCU was the first Canadian finan-cial institution to publish a social audit report, which was in 1993. In 1996, MCUhad its social audit externally verifiedanother first. MCUs 1998 social audit ex-



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amined the organizations commitment to its internal and external community, in-cluding: an assessment of MCUs membership, specifically MCU as a democracy;its consumer policies; its responsiveness to its members; and its employee relations,including compensation, work environment, and employee support.

Socially Responsible InvestmentMCU also manifests its social responsibility and community-service philosophythrough counselling its members on socially responsible investment. MCU sells no-load Ethical Funds, which meet high standards in both financial performance andsocial responsibility; the First Ontario Fund, which invests in job-creating busi-nesses and cooperatives in Ontario; the Clean Environment Fund; and several othersocially responsible funds.

Donations

The Canadian Centre for Philanthropys Imagine campaign suggests that corpora-tions donate one percent of pre-tax profits to charitable causes: MCU makes con-tributions at a rate double this standard. While the banks are major charitabledonors in the community, MCU donates a higher percentage of profits than anyof the major banks.

Another MCU innovation, believed to be the first in Canada, is its SpareChange Program. Most members have spare change in their accountsnot rounddollar figuresand generally regard these sums as insignificant. MCU encouragesmembers to sign on to the Spare Change Program, which takes their spare changeonce a month and applies it to one of three special donation funds, which themember designates. The money in these funds are donated to community groupsworking on environmental issues, homelessness, or childrens issues. More than2000 members joined the program in the first year.

Community Development

Serving the community within the GTA is central to MCUs operating model. Ittries to provide support in many ways in addition to making donations. About 85percent of every dollar deposited in MCU is reinvested locally in the form of loansand mortgages to individuals, organizations, and small businesses.

MCU recently concluded an agreement with the Calmeadow Foundation totake over ownership and operation of Metrofund, Canadas largest micro-enterprise loan fund. Metrofund specializes in providing very small loans to dis-advantaged people who are starting self-employment businesses and would notqualify for traditional commercial financing.

In another initiative, MCU will be partnering with a downtown Toronto com-

munity service agency for a Community Banking Program. This program will pro-vide a half-time on-site MCU community banker who will help provide basic bank-ing services and information to the clients of the community service agency.

Defining t he TargetFinancial Services Consumers

Larry had no doubt that the target market decision and branding decision wereconnected. Since MCU served two major constituenciesend consumers and thesmall business and organizational marketplace, Larry started to compile informa-tion on these markets to help him in his decision-making process.

Appendix804


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Canadian Attitudes towardFinancial Institutions

Credit Union Central of Canada commissions an annual survey of Canadian atti-tudes toward financial institutions. Goldfarb Research conducts these studies usinga panel of 1600 Canadians. One of the first trends noted in these annual surveys

is Canadians negative attitudes toward banks. Eighty-two percent think banks make too much money, compared with only 31

percent who think credit unions make too much money.

While only 25 percent of the sample think banks are working well, 41 percentthink that credit unions are. Despite these attitudes, most Canadians still dealwith banks, often because they dont perceive any features differentiating finan-cial institutions.

Canadians select financial institutions that they believe will keep their deposits safe.Once they have this assurance, they look for financial institutions to provide otherthings including:

knowledgeable, friendly service

ease in completing transactions

the presence of deposit insurance

convenient locations

a range of diverse products and services

If these criteria are not met, Canadians may switch institutions. Fees and rates ofreturn may influence switching. It must be stressed, however, that these price-basedreasons are well down the list of reasons for switching. Items that link to the qual-ity of service ranked higher in importance (see Exhibit 8 for individual reasons forswitching financial institutions as outlined in Goldfarbs report). Finally, the stud-ies note that Canadians respect for banks has fallen to an 18-year low. Respon-


EXHIBIT 8 Goldfarbs Report: Reasons for Switching Financial Institutions

% of ThoseWho Switched . . . 1992 1993 1994 1995 1996 1997 1998

Poor service 34 34 33 36 40 34 37

More convenientlocation

33 31 29 33 27 30 27

Moved to another city 18 13 17 14 13 15 14

Preferred staff at newlocation

8 8 11 12 12 16 13

Better rates on loans 10 13 14 12 12 15 12

More convenient hours 14 12 11 17 17 14 11

Offered additionalproducts and/orservices

6 7 9 8 9 8 8

Better rates on savings 6 8 5 8 7 10 6

Better rates on termdeposits

8 5 6 6 7 8 6

ATM available 7 8 7 8 7 8 5

Offered promotion 1 2 1 2 3 3 2

Other 8 8 11 13 13 10 11


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dents were asked to rate the institutions, where 100 points was the maximum rat-ing they could give the institution. Credit unions consistently received the highestrating (see Exhibit 9 for the complete results).

Overall, Canadians negative attitudes toward banks may present an opportu-nity for credit unions to grow their market share if they can communicate why orhow they differ from banks.

The 10th Annual Financial Attitude Survey conducted by Investors Group ofWinnipeg provided Larry with more helpful information. This survey revealed thatCanadians are an increasingly well-informed and confident group of investors.Over one in three Canadians now have a written financial plan to guide theirinvestment: Men are somewhat more likely to have a financial plan than arewomen. Fewer Canadians are relying on the media, co-workers, or friends forfinancial information, and more are seeking guidance from financial advisors. Over20 percent go to their financial institution for investment information, while 18.7percent seek out financial advisors. Sixteen percent of Canadians see themselvesas aggressive investors, while 42.1 percent take a more conservative stance. In gen-eral, Canadian investors are well educated, sophisticated, and confident.

Finally, the National Credit Union Systems market growth opportunitiesworking committee has identified a number of demographic trends that are hav-ing an impact on credit unions strategies:

Baby boomers with increasing wealth are targets for retention: Over the next20 to 30 years, parents of baby boomers will pass away leaving their estates totheir children. This will be the single biggest transfer of wealth in history. Babyboomers are, therefore, key members that credit unions must retain.

Youth is an important target for growth: People in the 19-to-24 age bracketare consolidating their relationships with financial institutions. This is the stage intheir lives when lifetime relationships with institutions form. The youth market,therefore, is a major opportunity for credit unions to secure customers. Many ofthese people are students struggling to pay higher tuition costs and, while theymay be costly to serve now, they will soon be productive wage earners strugglingto deal with the debt they acquired as students. Surveys have shown that this group

prefers technology-based, convenient financial solutions to their problems. Theydemand speed and services that immediately meet their expectations.

Teens are a new target with increased spending power: Teens are increasinglyindependent consumers. They look for products and services directed specificallyat them. They will be experimenting with financial institutions for the first time.

Demographic trends also exist within local marketplaces. Toronto, Montreal,and Vancouver are some of the worlds most ethnically diverse communities, forexample. Some credit unions, like VanCity, have branches in predominantly Chi-nese sections of Vancouver where service providers are trained to meet the specificneeds of this community. Manitoba has some of the largest concentrations of Abo-riginal people; therefore, Assiniboine Credit Union tailors some of its offering to

Appendix806

EXHIBIT 9 Goldfarbs Report: Comparative Ranking of

Financial Institutions

1992 1993 1994 1995 1996 1997 1998

Credit unions 59 60 58 57 56 56 56

Caisses populaires N/A 69 62 56 53 53 54

Trust companies 51 52 51 52 50 49 50

Banks 57 57 56 53 47 47 44


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the Aboriginal community. Credit unions know they must respond to the localtrends in their own marketplaces to be successful.

Changing Attitudes towardSocial Responsibility

In addition to consumer attitudes about banks, Larry was aware of other key pub-lic attitudes. According to the Canadian Centre for Philanthropy, a recent nationalopinion poll found that 72 percent of Canadians are more likely to buy goods orservices from a company that commits resources to social and community con-cerns; 68 percent are more likely to invest their money in companies that demon-strably support the community; and 41 percent believe successful businesses shouldfocus on social and community issues rather than profits.

While these attitudes work in MCUs favour, Larry also knows that expressedattitudes do not necessarily produce follow-through behaviour by consumers. Con-sumers are increasingly interested in corporate social responsibility, but few arewilling to sacrifice anything related to price, convenience, or service quality.

Small Business and Non-Profit Market

Many credit unions, like MCU, hope to take a bigger bite of the small andmedium-sized business market. Credit unions currently have about 13 percent ofthis marketplace; but regional differences determine whether commercial lendingis a prime area of their business. Caisse Centrale Desjardins du Quebec is a leaderin business financing. Commercial lending is substantial in Alberta, BC,Saskatchewan, and Manitoba, but it is low in Ontario and much of AtlanticCanada.

Although similar in some ways to those affecting end-consumers, variablesaffecting buying decisions made by business buyers are different: In general, busi-ness buyers are more technical, price oriented, highly trained, and risk averse than

the end-consumer.MCU segments the commercial and corporate market, or non-personal mar-ket, into four groups:

businesses (any size)

non-profit organizations

housing co-ops

clubs, or informal, non-incorporated groups

MCU provides each of these four groups with tailored services and pricingdesigned to address its distinct banking needs. For example, businesses are morelikely to be seeking credit than non-profits. The non-profits, on the other hand,are very deposit and transaction service oriented. The housing co-ops, being large

housing projects, have service needs that relate to having a monthly cash deposit(monthly rent cheques and coin deposits). They also need consolidated informa-tion on rent cheques written on accounts with insufficient funds. Thus, for thehousing co-op sector, MCU set up a successful partnership program to providespecial banking benefits to housing co-ops with special rates and a growth-relatedmarketing fee paid to the local federation.

Up to this point, MCU has never actively advertised to small businesses. Ithad relied on word-of-mouth communications that generated enough business tofill its loan capacity. It has a full-time dedicated salesperson, George, who doesoutreach for this marketplace. He has been very successful at bringing in accounts.George has found that MCUs community orientation and its approach to social



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responsibility are very important in reaching parts of Metros market, especiallyhousing co-ops and non-profit organizations. Being a community-owned and con-trolled bank is something that community groups can relate to.

The Non-Profit Market in Ontario

Given that the non-profit sector had been a small but important part of MCUscustomer base, Larry thought that this market might be a very lucrative area forMCU to pursue more aggressively. In addition, the community-focused and sociallyresponsible operating philosophy of non-profit organizations in general was simi-lar to that of MCU. Thus, by targeting non-profit organizations, it would be pur-suing not only a potentially promising business market but also a market that wascongruent with MCUs objectives as a community-serving organization.

Larry knew that there were little market data available on non-profit organi-zations, particularly in the GTA: To pursue this market, he would have to makesome good market-sizing estimates. He did know that the Ontario non-profit sec-tor as a whole received $39 billion in revenues in 1994. Of these, 31 percent wentto hospitals and 22 percent to teaching institutions, which together composed only

five percent of the number of charities in Canada. Larry also knew that Ontarioscharitable sector had the largest revenues per capita. He was able to gain someadditional data from the Canadian Centre for Philanthropy (see Exhibits 10through 11).4 These data, however, do not isolate the GTA market. MCU wouldnot be able to service very large institutions such as major hospitals and univer-sities. Its market would be the smaller and mid-sized community institutions andorganizations in the GTA, which Larry estimated to have many hundreds of mil-lions of dollars in banking business.

Public

Larry knew that the choice of a primary target was an important aspect of brand

strategy development. However, he also hoped to find a brand positioning thatwould speak to the selected primary target on one hand without alienating or con-

Appendix808

EXHIBIT 10 Distribution of Charity Types within Ontario

Type of Charity Percentage Number

Arts and culture 5 1138

Community benefit 7 1653

Education 6 1604

Health 5 1190

Hospitals 1 271

Libraries and museums 2 475

Places of worship 37 9253

Private foundation 6 1479

Public foundation 5 1134

Recreation 2 612

Religion 7 1644

Social services 13 3147

Teaching institutions 4 885

Other 2 405

Total 100 24 890


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fusing Metros other important markets on the other. The thought entered his mindthat perhaps he should be looking for something with more universal appeal, butjust what that something was eluded him.

Decisions

The slogan that MCU used on all of its promotional materials referred to MCUas Much more than a bank. Promotional materials also used such titles as Frus-trated with your bank? MCUs main objective with these slogans was to presentitself as a banking alternative. Larry was increasingly unsure whether simply pre-senting MCU as a general alternative to banks was really powerful. He also ques-tioned what this did to differentiate Metro from other credit unions. Larry hadno doubt that MCU had some attributes that differentiated it from its competi-tors: Its operating philosophy, its policies and procedures, its products and serviceswere drastically different.

Larry was still uncertain of which direction to move. What market nichecould MCU best serve? How could MCU build and present a powerful and dis-tinctive brand in a very competitive market? While MCU had been very success-ful in past years, Larry was concerned that MCU needed a break-through brand-ing strategy focused on some clearly identified market segments. The task waslike beginning a giant jigsaw puzzle: Larry felt he had most of the pieces, but hejust wasnt confident he knew how to fit them all together. Fortunately, a mem-ber of his marketing department had sent him a memo regarding branding andpositioning that he hoped might give him some academic insight into his prob-lem (see Exhibit 12). Reading through this reinforced the importance of the taskto MCUs future success. Maybe he needed a consultant to guide him throughthis complex process.


EXHIBIT 11 Total Revenues and Percentage of Total Revenues Received

by Type of Charity

Type of Charity Percentage Dollars

Arts and culture 3.2 1 234 937

Community benefit 2.5 951 738Education 5.5 2 131 859

Health 8.8 3 415 459

Hospitals 30.7 11 917 017

Libraries and museums 1.7 661 562

Places of worship 6.0 2 317 142

Private foundation 1.9 720 978

Public foundation 3.2 1 236 028

Recreation 0.5 197 136

Religion 4.0 1 546 401

Social services 9.8 3 818 284

Teaching institutions 22.2 8 592 525

Other 0.1 45 465

Total 100 $38 786 531


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Notes1Estimated cost of network commercials, Media Digest, 19992000:22.2Keith J. Tuckwell, Canadian Advertising in Action 5th ed., Toronto, ON: Pearson Education,2000:332.3Canadian Bankers Association, Survey of Canadian attitudes, 6 June 2000, www.cba.ca.4Canadian Centre for Philanthropy, A provincial portrait of Canadas charities, research bulletin,17 May 2000, www.ccp.ca.5Jack Trout and Steve Rivkin, Marketing News, 7 December 1998.6Jack Trout, Advertising Age, 22 November 1999.

Appendix810

EXHIBIT 12 Metro Credit Union

Memo

To: Larry Gordon

From: Marketing Department

Date: May 2, 2000

Re: Some information on branding and positioning

Hi Larry,

I gather Jack Trout and Steve Rivkin are real authorities on branding and positioning. I found somematerial in a couple of articles they have written.

The first one gave some insight into differentiation, heres what it said:5

The principles of simple, common-sense thinking can be applied to any discipline in marketing. Compa-nies have to differentiate; they must supply customers with reasons to buy from them instead of theircompetition. That reason then gets packaged into a simple work or phrase and positioned in the minds ofcustomers and prospects. Differentiation comes in three parts:

Having a simple idea that separates a company from its competitors

Having the credentials or product that makes this concept real and believable

Building a program to make customers and prospects aware of the difference

The second one suggested some similar guidelineson a branding strategy:6

A marketers message has to make sense in the context of the category

The secret to brand differentiation is understanding that your differentness does not have to beproduct related

To build a logical argument for your difference, you must have the credentials to support your differ-entiating ideato make it real and believable

Every aspect of a marketers communications should reflect its difference: advertising, brochures, Website, sales presentations

Hopefully thatll give you some academic insight into your strategy Larry. Good luck!


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Landmark Sports Group:

Athlete Relationships andOlympic Promotions

In July 1998, Sharon Podatt, vice-president of Landmark Sports Group, wasapproached by a small Canadian investment firm Patrick Ross Financial Limitedto develop a sponsorship program to increase awareness of the firm among Cana-dian investors. Patrick Ross believed that it could benefit from the excitement sur-rounding the upcoming Sydney Olympics. While the firm knew that the Olympicswas a powerful attraction through which many firms had enhanced their image,it didnt have the resources to be an official Olympic sponsor. The request caused

Sharon to review some of her past projects at Landmark Sports Group. Shecouldnt believe how many hours had gone into each one. Especially challenginghad been her efforts combining Olympic athletes with programs that would ben-efit their corporate sponsors. Landmark represented many Canadian athletes andworked to develop sponsorship opportunities that matched athletes images andskills with the communication needs of Canadian companies. Sharon enjoyed herrole as vice-president of Landmark and knew that the upcoming Sydney Olympicswas a great sports marketing opportunity. One of her most memorable promo-tions with an Olympic theme had focused on Kerrin Lee-Gartner and her sponsorMidland Walwyn (acquired by Merrill Lynch in 1998) for the 1994 Olympics.

Much had changed since 1994. Sharon was particularly concerned about thenew, strict regulations on athlete sponsorship and ambush marketing. The Syd-ney Olympic Committee defined ambush marketing as the unauthorized associa-tion of businesses and their goods and services with the marketing of an event, suchas the Games, without paying for those marketing and association rights: Ambushmarketing is detrimental and damaging to the success of the Games and to the rightsof official Games sponsors and licenses and has the potential to mislead the pub-lic. Given the regulations, Sharon knew it would be difficult to develop a power-ful campaign for her new client. It would take considerable brainstorming to developanother comprehensive and exciting sports marketing promotion.

History of Landmark Sports Group

Elliot Kerr, president of Landmark Sports Group, was the driving force in the com-

pany. He built the company from almost nothing to its current status as a majorcompetitor to International Marketing Group (IMG). In the early 1990s, IMG wasthe largest sports marketing firm in Canada. Having worked at IMG himself,Elliott took a hands-on approach and developed most of Landmarks earliestclients by cold-calling companies in various industries.


This case was prepared by Lauren Dmytrenko and Phil Connell under the supervision of Dr. PeggyCunningham for use in the 2001 Inter-Collegiate Business Competition and is not intended to illus-trate either effective or ineffective handling of a management situation. Some information may havebeen disguised in the interest of confidentiality.

Copyright, Queens University School of Business, 2000


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Sharon Podatt, fresh out of university and completing a one-year post-graduate degree in marketing and public programs at Humber College, approachedElliot to work as a six-month, pay-free intern at Landmark. Initially, Landmarkoperated with just the two of them at the helm. Sharons experience with eventmanagement through her volunteer work at the Special Olympics and relatedsports activities proved to be invaluable.

Landmarks activities include acting as an agent for many sporting and relatedindustry personalities. Its extensive and impressive client list includes such famousnames as Silken Laumann and Elvis Stojko. (See Exhibit 1 for the full client list.)

Appendix812

EXHIBIT 1 LSG Athlete Client List

Golf Rob McMillan Member of the 2000 Canadian Tour

Winner of the 1996 Manitoba Open1996 Canadian Amateur Champion

Dawn Coe-Jones Winner of Three LPGA Tour Events1995 Winner of the LPGA Tournament of Champions

Liz Earley Member of the LPGA Tour1999 Second Place at Canadian Womens Professional Golf Championship

Diving Eryn Bulmer 2000 World Cup Bronze Medallist, 3m

1999 Canadian National Womens Diving Champion 1m, 3m.1998 National Womens Record Holder, 1m & 3m Springboard1998 Canadian National Womens Diving Champion, 1m, 3m1997 World Cup Champion

Mountain biking Alison Sydor 1999 World Cup Champion

1999 Silver World Championships

1999 & 1998 First Overall World Cup Title1999 Gold Medallist, Sydney, Australia, Pre-Olympic World Cup1996 Olympic Silver MedallistThree Time World Champion (1994, 1995 & 1996)

Equestrian Ian Millar Two-time World Cup Champion

Canadas Premier Equestrian7 time Olympian

Jonathon Millar Grand Prix Rider

Amy Millar Grand Prix Rider

Speed skating Catriona LeMay Doan 2000 Canadian Sprint Champion

1999 First Overall World Cup Standings, 500m1998 Canadian Female Athlete of the Year

1998 First Overall World Cup Standings, 500m & 1000m1998 Olympic Gold Medallist, 500m (set Olympic record)1998 Olympic Bronze Medallist, 1000m

Hockey Jayna Hefford Two Time Gold Medallist Womens World Hockey Championships (1997 & 1999)

1999 World Championships Tournament Leading Scorer, All-Star Selection1998 World Championships MVP1998 Olympic Silver Medallist

Vicky Sunohara Three Time Gold Medallist Womens World Hockey Championships (1990, 1997, 1999)1998 Olympic Silver Medallist, Two Time Gold Medallist Womens World Hockey Championships

Lori Dupuis Two Time Gold Medallist Womens World Hockey Championships (1997 & 1999)1998 Olympic Silver Medallist


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EXHIBIT 1 Continued

Curling Russ Howard Two Time World Champion (1987 & 1995)

Figure skating Marie-Claude Savard-Gagnon

and Luc Bradet

1997 Canadian National Pairs Champions

Elizabeth Manley 1988 Olympic Silver Medallist

Kayaking Caroline Brunet Three-Time World Champion (1997, 1998, 1999)

Karen Furneaux World Champion (1998)

Alpine skiing Allison Forsyth Two-time World Cup Silver Medallist

Wrestling Daniel Igali 1999 World Champion

Broadcasters Michael Lansbury Director of the Toronto Blue Jays on CTV Sportsnet

Director of the NHLCanada Cup, 1987 (CTV) and the 1994,19961999 Canadian Figure Skating Championships (CTV)

Director Live/Host Studio of the 1994 Winter Olympics, LillehammerDirector of Stanley Cup Playoffs 19951999 (CBC)

John Shannon Executive Producer CBC Hockey Night in CanadaProducer of the 1994 Winter OlympicsLillehammer and the 1992 Summer OlympicsBarcelonaProducer of the 1993 NHL All-Star GameNBC

Rod Black CTV Sports

Don Cherry CBC Hockey Night in Canada

Bob Cole CBC Hockey Night in Canada

Chris Cuthbert CBC Sports

Kerrin Lee-Gartner CBC Sports1993 Sports Federation Female Athlete of the Year1992 Olympic Gold MedallistDownhill, Albertville

Paul Martini CBC Sports

Daren Millard CTV Sportsnet

Greg Millen CBC Hockey Night in CanadaColour analyst, 1994 Winter Olympics for CTV

Jim Nelford Golf Commentator

Scott Oake CBC Sports

Leo Rautins CTV Sports, Raptors Basketball AnalystESPN Basketball Analyst

Elfi Schlegel NBC Sports

Michael Smith CBC Sports1996 Gold Medallist Gotzis Decathlon1995 World Championships Bronze Medallist Decathlon

Barbara Underhill CTV Sports

Debbi Wilkes CTV Sports Al Strachan CBC Hockey Night in Canada

Toronto Sun

Motivational speakers Silken Laumann Former Olympic Rower

Rubin Hurricane Carter Former Boxer

Stephen Brunt The Globe and Mail

Cary Mullen 1994 World Cup Champion Downhill

Richard Peddie President, Maple Leaf Sports and Entertainment

Other Michael Burgess Singer


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Kerrs focus on developing long-term relationships with the athletes proved to bevery rewarding, and most of the firms first clients still remained with it even afterthey retired from professional sport.

Landmarks reputation as a respected athlete agency grew to include strongcapabilities in event management. Golf tournaments, skating tours, and other pro-motions were developed in-house. Much of Landmarks early business arose after

Elliot developed programs and initiated contact with prospective companies whosepublic relations could benefit from including a sports marketing component. Aunique characteristic of Landmarks sponsorship drive was its interest in pursuingnon-traditional sponsors rather than the Coca-Colas and Nikes of the world: Land-mark had been particularly successful in showing smaller firms the power of sportssponsorship. (See Exhibit 2 for a profile of Landmark.)

Appendix814

EXHIBIT 2 Landmark Sports Group Agency Profile

Our Philosophy

The Landmark Group, a sport and special event marketing company, was founded in February 1987, based on

the principles of integrity, honesty, old-fashioned hard work, and the mandate to always approach a clientsbusiness in an innovative manner. These principles have been strictly adhered to, and as a result, the Land-mark Group has grown into a truly national sport and special event marketing company operating from ourbase in Toronto.

The business philosophy at Landmark is simple. We work harder than the competition with desire, determina-tion and dedication.

Desire to deliver value for the dollars our clients spend.

Determination to ensure our service always exceeds our clients expectations.

Dedication to excellence, because excellence is not just an ideal to strive for, but an expectation to be met.

The first order of business in everything we do, is to understand our clients needs, assist in creating realisticexpectations, and then develop partnerships with them to achieve their stated goals. This is truly evident inthe four main divisions of our organization: event management, corporate consulting, athlete representationand sponsorship, and media sales.

Event ManagementThe organization, planning and implementation of any type of special event is a major undertaking. Afterstudying a clients needs and objectives, involving them in targeted events, acquiring secondary sponsors, ne-gotiating facility contracts, and overseeing the thousands of details around such an exercise, the LandmarkGroup implements all aspects of sport and non-sport involvement. This includes development of all collateralmaterials associated with events, as well as all required public relations. In effect, we offer a complete serviceon a fully turnkey basis.

Securing Sponsorships

Mounting and staging an event can be costly depending on the size and scope. Many events are conductedannually, while others are held on a one-time basis. With each type of event, sponsorship and/or donation dol-lars are required to competently and effectively conduct the activity. The Landmark Group has developed areputation for efficient and expedient sponsor acquisition at all levels.

Public Relations

Our staff are skilled and experienced in their public relations activities which include: preparation of news re-leases, orchestrating press conferences, liaising with the media, organizing special media functions, and de-veloping full public relations plans.

Collateral Material

The Landmark Group has the resources to design and produce a wide range of collateral materials for anyevent. These may include items such as logos, posters, brochures, print advertisements, pins and assortedclothing (T-shirts, sweatshirts, hats etc. . .).

Corporate Consulting

The Consulting Division of the Landmark Group is enjoying tremendous growth with a diversified group ofclients. Our philosophy is not to simply be a supplier to our clients, but to interact with each of them todevelop innovative, trailblazing programs. The Landmark Group believes our clients should lead with aproactive mentality as opposed to a reactive response in the special event industry.


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continued

EXHIBIT 2 Continued

Whether it is guiding our present client base in the corporate sector on the use of sport or non-sport (environ-ment, arts, music, cause related) activities to meet marketing and communication needs, or analyzing currentactivities for new and/or prospective clients, the Landmark Group has developed a reputation for providing in-sightful, critical analysis and artful marketing strategies.

With rising costs, increased clutter, and perceived ineffectiveness of mass media on one side, and thephenomenal growth and use of events for a targeted marketing approach on the other, there is a fiduciary re-sponsibility to choose events wisely and thereafter measure their effectiveness objectively.

The Landmark Group is capable of providing a careful analysis of your organizations marketing and communi-cation objectives, undertaking a creative review of programs that would most effectively meet thoseobjectives, developing an integrated strategy of involvement in an event program (e.g., sponsorship, trade andconsumer promotions, cause related activities, additional extensions) and then detailing a qualitative andquantitative evaluation (pre and post) of all event marketing and program activity.

Athlete & Personality Representation

Over the last ten years, the Landmark Group has established many solid relationships with Canadas elite am-ateur, Olympic, and professional athletes, and television personalities. Each athlete in their own waypossesses attributes we all strive to acquire and use in our personal, social, and business lives.

Many of todays blue chip corporations have discovered, through the use of sponsorship, how athletes can en-hance a companys business image for the consumer.

The Landmark Group secures and negotiates on behalf of the athletes and personalities with respect to theiravailability and remuneration for a given event or sponsorship opportunity.

The Landmark Group also:

Negotiates merchandise/endorsement relationships

Negotiates equipment contracts

Develops and coordinates personal appearances

Develops and manages media relations strategies

Provides financial management

Sponsorship

Sponsorship Packaging

In addition to professionally preparing and printing a final document, the Landmark Group can accurately de-velop targeted and fully descriptive sponsorship packages that will:

Review and analyze the specific property/properties Determine and define objectives

Develop strategies and tactics

Create uses for the property to meet specific industry/corporate needs

Sponsorship Solicitation

Through our database system, the Landmark Group has an enhanced ability to service current clients in addi-tion to developing a working file on prospective partners.

More than 2000 companies on our database

Companies available by industry category

Cross-referenced to individual contacts

Key variable fields include:

Most recent meeting/contact

Response/FeedbackStatus

Budgeting process/timing

The Landmark Group is able to easily retrieve, manipulate, and report this data to deliver an accurate andquick response.

Sponsorship Servicing

Once a corporate partner is secured, servicing the relationship becomes key.

Regular communication is mandatory to maintain corporate relationships.

Landmark can develop a communication link and provide feedback, support, and other service elementsto maintain and help the partnership grow.


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Landmarks Relationship with Kerrin Lee-Gartner

Kerrin Lee-Gartner (see Exhibit 3), one of Canadas premier downhill skiers, grewup in the small British Columbia mining town of Rossland, the home of another

famous Canadian skier, Nancy Greene. Kerrin began skiing at three and proved anatural downhiller. She participated in racing programs at the local Red Moun-tain Ski Club, eventually competing in provincial races. A one-year break from thesport at age 13 and not meeting provincial team standards at age 15 only strength-ened her determination and desire to win.

Named to the National C team in 1984, Kerrin joined the World Cup circuita year later. Despite significant potential, she initially had her share of bad luck.She suffered a number of serious injuries, which demanded months of rehabilita-tion and a significant amount of time off the snow. In an elite athletes world, timeaway means time lost keeping pace with the sport as well as an inability to com-pete. However, determination to win allowed Kerrin to finally reach her first WorldCup top-three podium result in 1991.

In the period before the Olympics in Albertville, France, the Canadian AlpineSki Team had been demoralized by injuries and mediocre performances. But ashappens so often at big ski-racing events, one individual can turn a team around.Kerrin stepped forward and lifted team spirit and Canadian hopes onto her shoul-

Appendix816

Source: Kerrin Lee-Gartner, 22 June 2000, www.kerrinlee-gartner.com.

EXHIBIT 3 KerrinLee-Gartner

EXHIBIT 2 Continued

Regular contact/meetings can be arranged by Landmark.

We would work together to develop cross-promotional opportunities with other sponsors.

Speakers Network

This area provides sports related speakers from diverse backgrounds, which include present and former topCanadian athletes and prominent media personalities.

The focus and topics they discuss can be tailored to suit any audience, for example, team work, leadership,striving for personal growth and excellence, staying competitive, and the pursuit of a dream.

Our speakers network gives you access to a wide variety of speakers to accommodate any event from annualmeetings, open houses, workshops, clinics, to employee functions.


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ders. She won a first-ever Olympic gold medal in the downhill event, realizing alifelong dream.

The early 1990s was a period of rapid evolution for sports marketing firms.Suddenly, agencies that could represent the interests of amateur and professionalathletes were in demand. Kerrin, following the success in Albertville, selected Land-mark to act as her agent to help her coordinate her obligations as an athlete. Fur-

thermore, as training costs increased, athletes also found that sponsorship was nec-essary to help them cover living, training, medical, and travelling costs. Landmarksstraightforward and honest approach to the agencyathlete relationship helped setthe stage for some exciting sponsorship opportunities for Kerrin, as the 1994 Win-ter Olympics in Lillehammer, Norway approached.

Working with M idland Walwyn

In mid-1992, Landmark approached Midland Walwyn (MW) with a sponsorshipprogram designed with Kerrin in mind. Given that the next Winter Olympics wasonly two years away in Lillehammer (due to the change to split the Winter andSummer Olympics to alternating every two years), this was an ideal opportunityto capitalize on Kerrins latest success and market MW.

Instead of waiting for a firm to approach Landmark, Elliot Kerr approachedMW with a sponsorship plan. Created at a time of deregulation in the Canadianfinancial services industry, MW had unique regional and market strengths, whichmeant, to Elliot, that a nationally focused program would be ideal for it. MWwas one of the countrys top five underwriting firms, with about 600 000 clientaccounts. Its strength in IPOs, knowledge of a number of industry sectors, exper-tise in developing innovative products, and relationship-focused client serviceaccounted largely for the firms success. Its asset management business, Atlas AssetManagement, offered 24 externally managed mutual funds. MW also ranked highamong institutional investors for its equity research group. (See Exhibit 4 for finan-cial data on MW.) Landmark recognized that RRSPs and investment-based com-

panies were starting to gain a high profile among the Canadian public. Further-more, competition between investment firms was growing, as the baby boomersneared the height of their working careers and began to think of retirement. Elliotbelieved that the ability to create goodwill for the company through sponsorshipwas an ideal way to attract new clients as well as retaining current ones.

Landmark knew that the key to successful sponsorship programs was havinga multi-faceted, integrated, high-impact program. While much of the sponsorshipfee paid by MW was to obtain rights to have its logo placed on Kerrins clothing,


EXHIBIT 4 Midland Walwyn Five-year Summary Data

Year Sales* Net income*

1993 496.00 63.04

1994 471.50 29.08

1995 517.97 18.66

1996 719.20 49.45

1997 846.71 58.53

Growth Rates 14.30 1.84

*Millions of dollars

Source: Industry Canada, 15 May 2000, strategis.ic.gc.ca.


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this was only the start of the program. For alpine skiers, their headgearhelmet,toque, or headbandwas the only piece of equipment where they could exhibitnames of sponsors. The remaining space on their uniforms often had advertising,but it belonged to the Canadian Ski Team sponsors and to the organizers of eachrace or tour. Knowing that Kerrin would have a lot of exposure in the upcomingWorld Cup season, MW prominently displayed its logo on both her helmet and

her toque and cap that she would wear immediately after the races. It consideredthe exposure of the MW logo as equivalent to free television and print advertis-ing, especially if Kerrin reached the podium.

Kerrin and Landmark worked with MW to develop a series of videos thatcentred on her relationship with her MW broker. These videos had credibilitybecause Kerrin already had a very successful working relationship with a MW bro-ker from Calgary before her sponsorship deal attained through Landmark. Thisalso kept the videos from violating the dictates of the Canadian Advertising Stan-dards. (See Exhibit 5 for excerpts from the code.) As well as showing Kerrin meet-

Appendix818

EXHIBIT 5 Excerpts from the Canadian Advertising Code

Canadian Code of Advertising StandardsMay 1999 Revision

Self-Regulation of Advertising in Canada

The Canadian Code of Advertising Standards (Code), which has been developed to promote the professionalpractice of advertising, was first published in 1963. Since that time it has been reviewed and revised periodi-cally to keep it contemporary. The Code is administered by Advertising Standards Canada/Les normes canadi-ennes de la publicit (ASC) (formerly the Canadian Advertising Foundation/la Fondation canadienne de lapublicit). ASC is the industry body committed to creating and maintaining community confidence inadvertising.

The Code sets the criteria for acceptable advertising and forms the basis upon which advertising is evaluatedin response to consumer or trade complaints. It is widely endorsed by advertisers, advertising agencies, media

that exhibit advertising, and suppliers to the advertising process.Consumer complaints to ASC about advertising that allegedly does not comply with the Code are reviewed andadjudicated by the English national and regional Consumer Response Councils and by their counterpart inMontreal, le Conseil des normes (collectively referred to as Councils and individually as a Council). These au-tonomous bodies of senior industry and public representatives are supported and co-ordinated by, butaltogether independent from, ASC.

Trade complaints about advertising, based on the Code, are separately administered under ASCs TradeDispute Procedure.

Definitions

For the purposes of the Code and this document:

Advertising is defined as any message (the content of which is controlled directly or indirectly bythe advertiser) expressed in any language and communicated in any medium (except thoselisted in Appendix A to the Code) to Canadians with the intent to influence their choice, opinion orbehaviour.

Advertising also includes advocacy advertising, political advertising, and election advertising,as defined below.

Advocacy advertising is defined as advertising which presents information or a point-of-view bear-ing on a publicly recognized controversial issue.

Political advertising is defined as advertising by any part of local, provincial or federal governments,or concerning policies, practices or programs of such governments, as distinct from electionadvertising.

Election advertising is defined as advertising regarding a political party, a political or governmentpolicy or issue, an electoral candidate, or any other matter before the electorate for a referendum, that iscommunicated to the public within a time-frame that starts the day after a vote is called and ends theday after the vote is held. In this definition, a vote is deemed to have been called when the applicablewrit is dropped.


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ing with her broker to help answer typical client concerns, the video productionsused footage of her races and training. The finished videos were used at sales meet-ings to encourage new clients to work with MW.

The success of Kerrin and MWs relationship depended on Landmarks abil-ity to coordinate and organize programs between the two. In addition to the cloth-ing and video production, it produced a number of promotional commercialsshowing Kerrin racing and winning, posters, and photo cards. Kerrin also took anactive role in contributing columns to MW sales brochures and client newsletters.

EXHIBIT 5 Continued

Application

The Code applies to advertising by (or for):

advertisers promoting the use of goods and services;

corporations, organizations or institutions seeking to improve their public image or advance a point ofview; and

governments, government departments and crown corporations.

Exclusions

Canadians are entitled to expect that election advertising will respect the standards articulated in the Code.However, it is not intended that the Code govern or restrict the free expression of public opinion or ideasthrough election advertising, which is excluded from the application of this Code.

Scope of the Code

The authority of the Code applies only to the content of advertisements and does not prohibit the promotion oflegal products or services or their portrayal in circumstances of normal use. The context and content of the ad-vertisement and the audience actually, or likely to be, or intended to be, reached by the advertisement, and themedium/media used to deliver the advertisement, are relevant factors in assessing its conformity with theCode. In the matter of consumer complaints, Councils will be encouraged, when in their judgment it would behelpful and appropriate to do so, to refer to the principles and standards expressed in the Gender Portrayal

Guidelines (as amended from time to time) in order to identify acceptable standards respecting the represen-tations of women and men in advertisements.

The Code

The Canadian Code of Advertising Standards is widely supported by all participating organizations, and is de-signed to help set and maintain standards of honesty, truth, accuracy, fairness and propriety in advertising.

No advertising shall be prepared or knowingly exhibited by the participating organizations which contravenesthis Code of Standards.

The provisions of the Code should be adhered to both in letter and in spirit. Advertisers and their representa-tives must substantiate their advertised claims promptly when requested to do so by one or more of theCouncils.

1. Accuracy and Clarity

(a) Advertisements must not contain inaccurate or deceptive claims, statements, illustrations or represen-tations, either direct or implied, with regard to price, availability or performance of a product or service. In as-

sessing the truthfulness and accuracy of a message, the concern is not with the intent of the sender or preciselegality of the presentation. Rather, the focus is on the message as received or perceived, that is, the generalimpression conveyed by the advertisement.

(b) Advertisements must not omit relevant information in a manner which, in the result, is deceptive.

(c) All pertinent details of an advertised offer must be clearly and understandably stated.

(d) Disclaimers and asterisked or footnoted information must not contradict more prominent aspects ofthe message and should be located and presented in such a manner as to be clearly visible and/or audible.

(e) Both in principle and practice, all advertising claims and representations must be supportable. If thesupport on which an advertised claim or representation depends is test or survey data, such data must bereasonably competent and reliable, reflecting accepted principles of research design and execution that char-acterize the current state of the art. At the same time, however, such research should be economically andtechnically feasible, with due recognition of the various costs of doing business.

(f) The entity that is the advertiser in an advocacy advertisement must be clearly identified as the adver-

tiser in either or both the audio or video portion of the advocacy advertisement.2. Disguised Advertising Techniques

No advertisement shall be presented in a format or style, which conceals its commercial intent.


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Her personal interest in assuring that her own future was secure was evident inthe commitment she made to her sponsorship deal with MW. Representatives atMW often proclaimed to Sharon at Landmark how happy they were with thisgreat friendship with Kerrin. Having worked on many other sponsorship deals,Sharon found that these relationships were much more successful when the ath-letes took it upon themselves to contribute as much as they could to the spon-

soring company.

Developing an Olympic Promotion

Knowing that Kerrin would not be allowed to display its logo during theOlympics, MW sat down with Landmark to brainstorm about how it could cap-italize on the growing popularity and spirit of the Olympic Games. MW was notlarge enough internationally to justify the expense of becoming an official Olympicsponsor, and regulations outlining what symbols and phrases non-official Olympicssponsor could use were becoming more stringent. The discussions between Land-mark and MW representatives always came back to the idea of providing theircurrent clients with the opportunity to travel to the Olympic Games in Lilleham-mer to personally cheer Kerrin on.

Sharon knew from the outset that organizing the trip would be an enormouschallenge, given that the final decision to use the trip as a contest prize was notmade until late summer of 1993. MW agreed to pay all the expenses for the tripas well as pay Landmark a management fee to compensate for the time and effortit put into the design and execution of the trip. (See Exhibit 6 for a full budgetfor this campaign.) The trip promotion began with the distribution of 300 000magnets that featured the draw date for the contest and the prizes available to

Appendix820

EXHIBIT 6 Budget for the Execution of the Kerrin Promotion

Banners 500

Business-class air travel 10 000

Entertainment (sleigh ride, tours, etc.) 1 500

Expenses 1 000

Gas 500

Gift baskets 300

Ground transportation 400

Hired guide 1 000

Hotel 12 000

Landmark management fee 10 000

Meals/snacks/drinks 6 000Olympic event tickets 10 000

Parking 150

Photography 500

Promotional materials 500

Tolls 100

Van rental 1 000

Pre-tax total 55 450

Taxes 8 318

Total $ 63 768


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MWs current client base. Each magnet had printed on it the clients identificationnumber for the draw. The primary objective for the Olympic promotion was notto attract new clients, but rather to reward current customers for their commit-ment to the companya goodwill building tactic.

That was the easy part. Sharon then had to coordinate the full logistics ofthe trip that would be rewarded to three individuals and their guests for a total

of six adults. The original plan was to have personnel from MW accompany thewinners on their trip abroad. However, MW executives found that they could-nt spare this much time away from the office, so Sharon was put in charge ofacting as the winners host. The trip was to include airfare, hotel, meals, ticketsto Olympic events, and all travel during the stay in Lillehammer. A full itiner-ary had to be planned. It was fortunate that Sharon had contacts in the mediawho helped her find accommodations and tickets, given their scarcity and hertight timeline.

The objectives of the trip were to provide the winners with an experiencethat few individuals have the opportunity to enjoy, given the high costs of attend-ing the Olympic Games, and to focus on providing Kerrin with Canadian sup-port while in Norway. Therefore, Landmark and MW would provide all winnerswith clothing emblazoned with the MW logo as well as signs to display whilecheering Kerrin on during her races. To kick off the promotion, Kerrin flew toToronto to participate in drawing the winners names and to telephone them tosay that they had won the draw. (See Exhibit 7 for Landmarks Olympic Plan.)

While the promotion complied with the laws and regulations governing adver-tising and promotions, Sharon was concerned that some might regard this contestas a form of ambush marketing, since the official Olympic sponsors and the Cana-dian Olympic Association (COA) might see it as implying that the sponsoring com-pany was an Olympic sponsor, when MW had not actually paid for that entitle-ment. In fact, ambush marketing is often considered the practice of deceiving thepublic through taking advantage of subtle (and not so subtle) messages that cre-


EXHIBIT 7 Olympic Plan for Kerrin Lee-Gartner

Plan A: Kerrin medals

Determine Midland Walwyn identified apparel requirements.

Obtain media list from Canadian Olympic team media attach who is responsible for media/athleterelations.

Tour downhill and GS sites to determine athlete accessibility after race.

Determine athlete protocol post-event including possibility of drug test, required media interviews, etc.

Ensure Midland Walwyn apparel is on site at all times.

Identify appropriate Midland Walwyn representative and coordinate interviews and photos.

Make any arrangements to send information and photos to Canadian media in Canada. Medal presentations

No sponsor identification possible.

Midland Walwyn group to be present with banners.

Arrange possible photos with group.

Determine plan for Kerrins return to Canada (airport greeting, luncheon, press conference)

Plan B: Kerrin does not medal

Determine (if possible) the story behind not medal

Kotler Pom 6ce Compcase

Documents