Bank of America (BoA) is one of the world’s largest financial institutions and holding companies. It has achieved this via a combination of strategic business and marketing decisions which enabled it to expand to cover more than 75% of the United States population and 44% of the country’s high net worth households for a total of 55 million consumer and small business clients. The marketing plan of BoA is highly detailed to accommodate the many products and services the bank offers the U.S. and international consumer.
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Competition within the U.S. banking industry is fierce with a number of large banks in the market place including JP Morgan Chase, Citigroup, Wells Fargo, and HSBC, all offering similar products and services to the U.S. population. Innovation amongst the banking industry is difficult to achieve and hence rare but BoA, through its earlier investment in services research and development, is well positioned to increasingly expand its market share.
The bank’s strong distribution network, unmatched by any of its competitors, allows it to hold a strong market position in the U.S. and international market which will allow it to withstand the current financial crisis and depressed economic conditions. Its concentration in the U.S. means that it’s affected by the movements in the U.S. economy. For example, during the economic crisis the bank sustained heavy losses due to the subprime market exposure which placed a great deal of pressure on margins and eroded the bank’s capital.
Its ability to quickly repay its government loans borrowed via the Troubled Assets Relief Program (TARP) displays the banks cautious and sensible approach to capital management and dividend policy thus further strengthening its solvency position.
Despite having already maximised its market share of U.S. deposits under federal law, BoA still has a number of expansion opportunities available. These include its credit card and affinity marketing operations, its wealth management business through its acquisition of Merrill Lynch and its mortgage division through the acquisition of Countrywide Financial Corporation. These opportunities however will be subject to pending government measures and regulations due to be developed as a result of the recent financial economic crisis.
The bank’s main objective is to dominate the American retail banking sector and strive to become a market leader by obtaining the largest market share through better value for money banking products, better customer services, tailored banking solutions that suit customer needs and high promotion spending. It secondarily plans to expand its brand into international markets and become a “universal” bank.
BoA has chosen to position itself as an all-American brand, with sponsorships and products that include NASCAR and Major League Baseball. Given that banks essentially sell the same services and products, differentiation is necessary to gain a competitive advantage by providing the consumer market greater value propositions. Innovation amongst the banking industry is difficult to achieve and rare but BoA, through its earlier investment in services research and development, has revolutionised banking by providing innovative products such as the “Keep the Change” campaign, full customer service branches and advanced online banking facilities.
The primary product that BoA focuses on promoting is its brand. By creating brand awareness, the bank aims to build consumer’s confidence and trust and thus cater to their needs as a secondary approach by offering products and services including:
“The bank allocates $2.3 billion to its marketing budget, and that amount is expected to grow” (Anne Saunders, Brand and Advertising Executive Oct 2008). Advertising campaigns have been realigned to match customers’ concerns about banking.
Implementation is usually on an annual basis which ensures that before the second phase of the project is covered, the funds released for the first phase have to be accounted for fully. This helps curb the misappropriation of funds. The implementation of the market plan in phases also enables the investors to monitor the progress of the business at different levels of growth.
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BoA employ a “constant measuring process using a dashboard approach – aligning the critical elements in the marketing mix that seem to do the most and make the most difference not only for our brand, but, specifically, for product salesâ€¦ BoA is deeply steeped in Six Sigma – we are continuously conducting a measurement processâ€¦ we plan; we test; we implement; we analyse; and we refine” (Anne Finucane, Chief Marketing Officer, Bank of America).
Customer satisfaction and feedback is measured via branch and online questionnaires, feedback forms, media reports and brand loyalty linked to product and service use. BoA constantly reviews Return On investment (ROI) on each product in terms of profitability by customer, segment, region and unit as well as comparing the best use of media alternatives.
In 2007, BoA introduced a brand positioning and tag line with a totally integrated marketing approach “Bank of America – The Bank of Opportunity”. This was the latest campaign in the bank’s marketing history. Its ongoing successes, despite the economic booms and busts, can be attributed to its research methods, innovation, product development, customer segmentation, sales training, and corporate social responsibility.
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