Standard Charter Bank Advertising Report

Submitted to: Sir Abid KhawajaSubmitted by: Syed Usman WazirBBA 2K5-BRoll # 94

Advertising Plan of Standard Chartered Bank

2Executive Summary

Premises-summary of information presented in marketing plan

Pakistan’s banking sector has remained remarkably strong and resilient, despite facing pressures emanating from weakening macroeconomic environment since late 2007, according to the assessment of the State Bank of Pakistan’s Financial Stability Review 2007 08.‐

Accordingly the banking sector is primarily dominated by major players such as Habib Bank limited, Bank Al-falah, CitiBank, Allied Bank, MCB, Askari Bank followed by Standard Chartered bank and RBS (formerly ABN Amro) and Bank Al-Habib. Smaller players like Samba who recently acquired Cres Bank and acquisition of union bank by Standard Charter Bank also added to the escalating competition among banks to gain maximum market share as possible.

This severe competition in current market and world economy has led the financial institutions to use aggressive mediums of communication so that to gain strategic market position in the target market. In regard I have presented a comprehensive Advertising Plan for Standard Chartered Bank’s Credit cards so that they would be able to improvise on their already existing advertising strategy. The report in this regards consist of analysis of current situation, strategy and tools as well.

Summary of Advertising Objectives

The advertising Objectives for Standard Chartered Bank’s Credit cards would be to:

o Informo Persuadeo Remind

This would help to generate awareness, sales and gain market share for the bank.

Summary of Advertising Strategy

The advertising strategy would consist of following methods:

o Sponsorshipso Co-Brandingo Digital Billboardso SMS to existing customerso Print Mediao TV commercials

3Situation Analysis:

Industry overview:

A banker or bank is a financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money. It is an institution for receiving, keeping, and lending money1

The changing economic environment has a significant impact on banks and thrifts as they struggle to effectively manage their interest rate spread in the face of low rates on loans, rate competition for deposits and the general market changes, industry trends and economic fluctuations. It has been a challenge for banks to effectively set their growth strategies with the recent economic market. This in turn means that banks have to effectively and aggressively advertise their services in order to position themselves strongly.

Description of Company:

Standard Chartered PLC is listed on both the London Stock Exchange and the Hong Kong Stock Exchange and is consistently ranked in the top 25 among FTSE-100 companies by market capitalization. Standard Chartered has a history of over 150 years in banking and operates in many of the world's fastest-growing markets with an extensive global network of over 1,400 branches (including subsidiaries, associates and joint ventures) in over 50 countries in the Asia Pacific Region, South Asia, the Middle East, Africa, the United Kingdom and the Americas.

As one of the world's most international banks, Standard Chartered employs 60,000 people, representing over 90 nationalities, worldwide. This diversity lies at the heart of the Bank's values and supports the Bank's growth as the world increasingly becomes one market. With strong organic growth supported by strategic alliances and acquisitions and driven by its strengths in the balance and diversity of its business, products, geography and people, Standard Chartered is well positioned in the emerging trade corridors of Asia, Africa and the Middle East. Standard Chartered derives over 90 per cent of profits from Asia, Africa and the Middle East. Serving both Consumer and Wholesale Banking customers worldwide, the Bank combines deep local knowledge with global capability to offer a wide range of innovative products and services as well as award-winning solutions.

Pakistan:

Standard Chartered Bank2 (Pakistan) Limited - A locally embedded international bank. Standard Chartered is the largest international Bank in Pakistan. The Bank has been operating in Pakistan for over 140 years when it first established its operations in 1863 in Karachi. After the acquisition of Union Bank in September 2006, the new entity Standard Chartered Bank (Pakistan) Limited was incorporated in Pakistan on 30 December 2006 as a subsidiary of Standard Chartered PLC.

The bank has a network of over 176 branches in Pakistan. Standard Chartered employs a workforce of over 9,000 employees in its Pakistan operations.

1 http://en.wikipedia.org/wiki/Banking_industry2 http://www.standardchartered.com/pk/personal/about-us/en/about-us.html

4Product life cycle

Standard Chartered Bank in this regard the service lifecycle of standard chartered bank lies in high growth stage. This is due to its penetration into Pakistan market during the era of high financial growth and economic uplifting policies of the government of that time. This provided Standard chartered bank to build upon a platform of solid and stable measures on which it is now growing. High growth with regards to market share and presence in terms of no. of branches in all major urban centers also led to a prominent position in the market thereby leading to an overall growth in terms of service offerings.

Competitive or marketing position

Pakistan’s banking sector has remained remarkably strong and resilient, despite facing pressures emanating from weakening macroeconomic environment since late 2007, according to the assessment of the State Bank of Pakistan’s Financial Stability Review 2007 08.‐

Accordingly the banking sector is primarily dominated by major players such as Habib Bank limited, Bank Al-falah, CitiBank, Allied Bank, MCB, Askari Bank followed by Standard Chartered bank and RBS (formerly ABN Amro) and Bank Al-Habib. Smaller players like Samba who recently acquired Cres Bank and acquisition of union bank by Standard Charter Bank also added to the escalating competition among banks to gain maximum market share as possible.

Other segments of industry pre dominantly include investment banking and investment firms who tend to formulate indirect competition with consumer banks.

Over all industrial market share in terms of number of branches is as under:

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Sales history and share or market

The global economic environment has significantly deteriorated and in this fiscal year Pakistan has faced both external and internal shocks. As a result of macroeconomic imbalances caused by these shocks, the economy has already begun to adjust through a slowdown in growth and rising inflation. However, Revenue for Standard Chartered Bank grew by 8% to PKR 5.79 billion for the quarter ended March 2008 against PKR 5.35 billion in previous corresponding quarter. This tends to indicate a still lucrative and competitive market for financial services in Pakistan.

Methods of distribution

The bank has ambitious growth plans3. It plans to continue expanding the branch network to deliver upon its vision of being a “locally embedded international bank”. In order to achieve these plans, it has embarked upon a unique “journey of transformation” through:

(i) Growth in its distribution footprint, (ii) Innovative products and services, (iii) Talented and diverse teams, and (iv) Sustainable business strategy based upon community investment.

SCBP expanded its distribution footprint by 26 branches in 2007, adding another 35 branches during the first half of the current year. The bank now operates with 176 branches in 41 cities. Pakistan’s

3 http://www.pacra.com/pdf/SCBP_R07.pdf

6consumer banking operations ranks sixth in the Group, while in terms of branch network, it is at third position.

Pricing strategies involved

Various bank charges and interest rates apply on services such as:

Personal Banking Islamic Banking Wholesale Banking SME Banking

Communications history

Overall communication medium in Pakistan particularly by SCB had been as under:

Billboards Office Themes Brochures Sponsoring Events TV commercials

7Target Market Description

1. Market segments

Overall market industry for banks in general and SCB in particular can be divided into following categories:

Personal Bankingo Accounts and Depositso Debit & Credit cardso Loans & Mortgageso Insuranceo Investment

Islamic BankingStandard Chartered, with an aim to meet the unique needs of its customer, has setup an Islamic Banking Division. The bank is offering tailor-made Shariah compliant products to its customers.

Wholesale Bankingo Transaction Bankingo Financial Marketso Corporate Financeo Principal Finance

SME Banking2. Primary market

3. Secondary market4. Market characteristics

a. Geographicb. Demographicc. Psychographicd. Behavioral

5. Marketing Objectivesa. Need Satisfying objectivesb. Long and short term sales target objectives

6. Marketing mix4

a. Product

Consumer banking

Standard Chartered provide mortgages, Credit Cards, personal loans, auto loans, deposit accounts, and wealth management products.

4 http://en.wikipedia.org/wiki/Standard_Chartered_Bank_(Pakistan)

8Corporate and institutional banking

Corporate & Institutional Banking provides trade finance, cash management and lending services.

Global markets

Global Markets provides foreign exchange, interest rate management and debt capital markets services that are very dynamic in Pakistan as there are a lot of changes in the economic climate.

Service Provided5:

Foreign Exchange Spot and Forward Asset & Liability management Short Term loans/deposits Interest rate / Liquidity management Economic Research & Analysis Customer Risk Management Non Deliverable Forwards FX Options Interest Rate Derivatives Interest Rate Swaps Cross Currency Swaps FRAs Interest Rate Options Financial Engineering

b. Price

Standard Chartered Bank Pakistan Limited is an active price maker in the market and handles flows of multinationals and foreign investors in the stock market. Variable service charges on apply on each category of service offerings, these range from bank charge rates to transaction costs etc.

c. Distribution

Standard Chartered Bank is one of the world's leading banks in foreign exchange and money market operations with specialist strengths in exotic currency products.[citation needed] Clients have access to a 24-hour dealing service through 20 dealing rooms in the principal financial centers. The bank has also established a strong reputation for dynamic involvement in new financial products such as options and derivatives and is particularly strong in the emerging

5 http://en.wikipedia.org/wiki/Standard_Chartered_Bank_(Pakistan)

9market currencies of Asia, Africa and Latin America where it is recognized as being a first choice provider in many markets.

With presence in more than 50 countries and 150 years of experience, the bank has a large local customer base in each of these markets attracting large volume transactions.

Standard Chartered Bank (Pakistan) Limited is Pakistan's oldest and largest foreign bank with over 150 branches in the country. The history of Standard Chartered in Pakistan dates back to 1863, when the Chartered Bank of India, Australia and China first established its operations in Karachi.

In 2006 Standard Chartered Bank acquired Pakistan's Union Bank. On 30 December 2006, Standard Chartered merged Union Bank with its own subsidiary, Standard Chartered Bank (Pakistan), to create Pakistan's sixth largest bank.

d. Communication

In Pakistan the communication mix for SCB had been more of below the line advertisement rather than an open traditional promotional and communication mix. They usually prefer to paint-out the entire bank branch using it as an attractive outdoor advertising medium. Other than that brochures within the bank are placed for walk in clients to announce their new service offerings.

7. Intended role of Advertising in the communication mixBanks operate in a significantly more competitive environment than they did a decade ago in Pakistan. The number of commercial banks became larger through acquisitions, and entered new markets as geographic market entry restrictions were gradually removed, first at the city, and then at the provincial level. This not only allowed banks to capitalize on economies of scale but also to spread their operations over the geographic space to diversify the local economy risk during 1980s and 1990s. Competition from credit unions6, which are exempt from income taxes, and non-bank financial services, such as money market mutual funds and finance companies, which are exempt from banking regulations, also stiffened during this period. Banks tried to counter non-bank competition by offering a wider range of products and services, ranging from insurance to investment banking, betting on the economies of scope. The dramatic changes in the banking sector suggest that the role of advertising in commercial bank production and performance may have increased in the new competitive environment.This means that major role of Advertising so far by Standard Chartered Bank in Pakistan had been to retain its existing market share as well as to gain competitive edge through its non advertising measures such as acquisition of Union Bank so that to not only increase its distribution network of branches all over Pakistan but to Advertise its presence through its signature painted building branches all across Pakistan as well.

6 http://www.cerge.cuni.cz/pdf/events/papers/031201_t.pdf

108. Advertising ObjectivesAdvertising in no matter what format, has primarily three major objectives:

1. Inform2. Persuade3. Remind

The advertising objectives thus for Standard Chartered Bank are and must be aligned such that people or target audience is informed of the service offerings that the bank is making. The awareness in this regard would help this deicide, compare and evaluate the service offerings of SCB with other competitive banks and thus rational decision on their part could be made. Once the awareness of service offerings is made, and then comes the persuasion part. Here SCB would work through it advertisements in such a way that the target audience would be persuaded to buy the service offerings from SCB rather than its competitors. And finally reminding the customers in regular cycle of service offerings from SCB would help to not only retain the existing customer base but would also help to start the cycle of informing to newer customers too.

9. Advertising StrategyDeveloping an Advertising Strategy7 to achieve the objectives of a campaign requires that consideration be given to both the ‘Message’ which will be communicated and the ‘Media’ through which it will be sent.As per BCG:

7 http://www.examstutor.com/business/resources/studyroom/marketing/advertising/3-advertisingstrategy.php

11Kim lord grid purchase decision positioning:

Advertising MessageAn advertising campaign, no matter how much money is spent, no matter what media is used, will only be successful if the Message appeals to the target audience. Given the level of advertising which bombards the average consumer, a successful advertising message must stand out amongst the advertising clutter. Thus marketing professionals are required to be creative, imaginative and innovative in developing the advertising message, both in terms of What is said, and How it is said. In this regards, SCB has had various messages that it had used for its promotional campaigns.

What is said...

This is often referred to as the ‘Big Idea’, and will normally address the key benefits sought by the target audience, motivating the audience to pay attention. Given the constant search for new ways to appeal to target audiences, it is difficult to categorize the content of advertising messages which a business may send. Below are a couple of examples of actual message strategy.

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13How Things are said:

How things are said, is often just as important as what is said. Creating attention grabbing and memorable advertising is increasingly vital, given the amount of advertising clutter in the marketplace. As with message content, advertising is constantly generating new styles of advertising, and since there had been greater competition in the financial and banking services market of Pakistan, so banks and insurance companies needed to use newer and more attractive methods to advertise their product service offering. SCB in this regard had used some of these message styles:

Personality symbolThis is a person or celebrity to represent the actual product service offering.

LifestyleHere they had linked the product service offering to a particular life style pattern for example SCB used its car financing ads to promote car for its prospective customers.

10. Advertising budget

After identifying the advertising objectives, the advertising budget8 must be set. Although current advertising budget for SCB is hard to determine but to know exactly how much a business should spend on advertising to achieve the desired level of sales, is more an art than a science. Commonly, the decision is based on past experience of expenditure on advertising, and the sales subsequently achieved. There are however a number of factors that can be considered in setting the advertising budget.

Factors influencing the setting of Advertising Budgets:

Product life cycle stage:

New products in the 'Launch' stage of their Product Life Cycle, will normally require greater expenditure on advertising to create product awareness, and encourage consumers to trial the product. Whilst products that have reached 'Maturity' in their product life cycle, will often require smaller advertising budgets to achieve the level of sales required. Since newer and competitive product service offerings are being made by SCB so it tends to create a stage of growth for SCB where it need to spend more on its advertising so that to create a strong positioning in the market that relates to its marketing objectives.

Competition:

The number of competitors in the market, and their expenditure on advertising competing products, will influence a business to spend to a similar or higher degree. Here in Pakistan, due to higher degree of competition in this arena makes such service providers to advertise aggressively using all mediums of communication.

8 http://www.examstutor.com/business/resources/studyroom/marketing/advertising/3-advertisingbudget.php

14 Product Differentiation:

A product very similar to other products on the market may require greater expenditure on advertising to differentiate it from its competitors. And since, banking and financial services are more or less similar so stronger yet convincing messages are needed to be conveyed in this market.

Allocation strategy:

Before setting an allocation of budget for SCB’s advertising strategy. We need to find out which approach to set the advertising budget best fits the current scenario and why?

There are number of approaches for setting an advertising budget such as:

Fixed percentage of sales

In markets with a stable, predictable sales pattern, some companies set their advertising spend consistently at a fixed percentage of sales. This policy has the advantage of avoiding an “advertising war” which could be bad news for profits. However, there are some disadvantages with this approach. This approach assumes that sales are directly related to advertising. Clearly this will not entirely be the case, since other elements of the promotional mix will also affect sales. If the rule is applied when sales are declining, the result will be a reduction in advertising just when greater sales promotion is required.

Same level as competitors

This approach has widespread use when products are well-established with predictable sales patterns. It is based on the assumption that there is an “industry average” spend that works well for all major players in a market. A major problem with this approach is that it encourages businesses to ignore the effectiveness of their advertising spend – it makes them “lazy”. It could also prevent a business with competitive advantages from increasing market share by spending more than average.

Task

The task approach involves setting marketing objectives based on the “tasks” that the advertising has to complete. These tasks could be financial in nature (e.g. achieve a certain increase in sales, profits) or related to the marketing activity that is generated by the campaigns. For example:

o Numbers of enquiries received quoting the source code on the advertisemento Increase in customer recognition / awareness of the product or brand (which can

be measured)o Number of viewers, listeners or readers reached by the campaign

Residual

15The residual approach, which is perhaps the worst of all, is to base the advertising budget on what the business can afford – after all other expenditure. There is no attempt to associate marketing objectives with levels of advertising. In a good year large amounts of money could be wasted; in a bad year, the low advertising budget could guarantee a further low year for sales.

Now keeping in mind the pros and cons of all the mediums of setting a budget for advertising. I believe that “Task Based” approach for setting the budget for Standard Chartered Bank is more feasible since this way it could achieve specific goals of reaching its target audience till the targets for its existing or specific product service offering is achieved. This will also relate to the marketing objectives set for SCB i.e. Inform, Persuade and Remind.

Communications Media:

Now before setting out the budget expense for SCB, we need to understand the demographics of overall advertisement industry in Pakistan. Firstly the existing break up of advertisement spends for banks in overall advertisements are as under:

News Papers:

13% 5%

5%

4%

4%

4%3%

3%3%3%

54%

Top 10 product Categories that advertised on Newspapers

Classified Advertising Mobile Comm. TV and Radio Channels Job Opportunities / Notices Real Estate Educational Institutes Banks Films Cars / SUVs Energy / FuelOthers

Magazines:

16

Classifi

ed Adve

rtisin

g

Mobile Comm.

TV an

d Radio Chan

nels

Job Opportu

nities / N

otices

Real E

state

Educati

onal Insti

tutes

Banks

Films

Cars / S

UVs

Energ

y / Fu

el

Others

0

5

10

15

20

25

30

35

40

45

50

Top 10 product Categories that advertised on Magazines

Series1

Now keeping in mind the existing advertising strategy of Standard Chartered Bank that primarily consists of:

Outdoor advertisements i.e covering up of entire building/branch in its message and colors Brochures Billboards TVC and Printed Ads

I have proposed a strategy that tends to add value on its existing advertisement campaign. These include:

Sponsorships SMS advertisements to its existing cliental Outdoor advertising to be included on Radio Cabs, Bus Stands, Airports and Digital Display

circuits.

17Currently Standard Charter Bank is a major sponsor of greatest race of Earth. In 2004, Standard Chartered created The Greatest Race on Earth (GROE), a challenging virtual relay race across our four established marathons in Nairobi, Singapore, Mumbai and Hong Kong. These locations represent some of the most challenging urban running environments in the world. Whether it's the intense heat of Mumbai and Singapore, the steep inclines of Hong Kong, or the high altitude of Nairobi, participants in GROE face an extremely difficult task. These marathons characterize the values and attitude that Standard Chartered believes in, and lives by every day - a "can-do" attitude, a priority on strength of trust, willpower, stamina, and the determination to "go the distance".

SCB can conduct a similar sponsored race here in Pakistan. Currently the Punjab government in particular conducts Lahore Marathon each year in which participants from all over the world come and perform. Sponsoring this event as major stakeholder will be easy because the management won’t have to actually conduct the event rather sponsor one that takes place under Punjab government supervision as Jashn-e-Baharan celebration in Lahore.

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Such sponsorship took place back in 2005 when standard chartered bank sponsored the Lahore marathon race. But after that it did not undertook such an initiative. So I believe sponsoring such event where the entire purpose directly relates to what the bank actually visions in makes a perfect medium for advertising itself in Pakistan.

Similarly the bank can also sponsor events such as twenty20 cricket cups which were primarily sponsored by former ABN AMRO.

Using SMS as a medium for advertising its services and new offerings is also an effective tool to its existing customer base. This will help them to be informed of its services and use them for word of mouth strategy as well.

Then advertising on digital billboards is also suggestive since the outlay is interactive and catchier. Such billboards are already in place in Lahore, Islamabad and Karachi.

Finally advertising in major newspapers like:

And other such magazines that have a target market correlating to that of SCB’s service offerings will create a healthy position as per mind share is concerned. Similarly advertising in peak hours such as between 8pm to 10 pm in channels such as GEO, ARY and HUM as well as CNBC, TENSPORTS and DAWN NEWS is suggested.

19Advertising Message

Copy elementso Advertising appeals

The advertising appeals for such ads would be mostly emotional, slice of life and would consist of

o Copy platformThe copy platform would consist of defining the goal of SCB’s message.

o Key consumer benefitsHere all the features of credit card usage of SCB would be highlighted in the ad

o Benefit supports or reinforcementsThe co-branding would help to reinforce the strategy upon the customer

o Product personality or imageIt would be aligned with the sales pitch of the ad itself and would tend to impose the overall credible image of SCB.

Art elementso Visual appeals

In ads, commercials, packaging, point of purchase and sales material and all such things would contain the colors of SCB as well as the tagline of the product itself to promote and position it aggressively.

o Art platform Layout, design, illustration style would be picture window with theme of the

video ad relating to it so as to synchronize the overall campaign.o Production elements

Color, size, style would be that of traditional standard charter bank’s original theme.

2011. Testing and Evaluation

This is justified from the viewership ratings of various channels as per the data till July 2008.

The strategy would thus then be tested and evaluated through brand recall surveys, GRPs and how the product itself has penetrated the market with sales volume so that the efficiency of ad reach could be analyzed.

21Probable Advertising Expense Breakage:

9%3% 3

%

40%5%

40%

Advertising Expense Breakage

TVCDigital BillboardSMSSponsorshipsBrochuresOutdoor advertising tools

Budget:

Budget Column1 Column2TVC

GEO150,000 per minute 18000000

ARY150,000 per minute 18000000

total36,000,000

Sponsorships44,000,000

SMS 100,000Digital Billboards 100,000 per hour 300,000Outdoor advertising 500,000Brochures 250,000NewspapersNawa-i-waqt 170,000The Nation 110,000The NEWS 120,000

total 400,000Grand Total 81550000

22Ads on TV will be played as 1minute each for 4 times a day for 30 days.

Conclusion:

Hence using such strategies where the message strategy and theme of advertisements would be as such so that to promote the overall sales of credit cards for Standard Chartered Bank is feasible. Although the costing of such promotions is comparatively huge, but keeping in mind the financial backing of the bank itself, it would help not only to increase the sales of the credit card but would also help to position the bank name overall.