In this report we have tried to analyse marketing strategies of Royal Bank of Scotland, UAE. We have tried to analyse the planning principles and processes that has been used by RBS to develop its marketing strategies. We have also tried to study the strategies of RBS through Porter's five force model and SWOT analysis. We have also tried to study the Marketing environment of RBS.
Royal Bank of Scotland (RBS) is one of the world's leading financial services providers and one of the oldest banks in the United Kingdom (UK). The group has continued to grow its business around the globe after the takeover of Westminster Bank in 2000.It has offices in Europe, the United States of America and Asia. .
The Royal Bank of Scotland Group plc is one of the largest global banking and financial services group. It is headquartered in Edinburgh, the Group operates in the United Kingdom, the United States and other Asian countries such as UAE through its two principal subsidiaries, the Royal Bank and NatWest. Royal Bank of Scotland have a large and diversified customer base and the bank provides a wide range of products and services to personal, commercial and large corporate and institutional customers in over 50 countries. RBS have the 3rd largest branch in the UAE amongst its eight branches in UK which serve approximately 250,000 customers. RBS has its main branch in Dubai with other offices in Dubai, Abu Dhabi and Doha. RBS provides Personal banking, Business and Commercial banking, Wealth Management, Royal Corporate banking and corporate and institutional service to its customers in UAE.
Planning principles and range of tools and techniques:
“Mission”: “The main mission of RBS is to create maximum economic value for their shareholders through a constant relationship focus on the financial services needs of their chosen clients segment and a strict adherence to their financial target.”
“Vision”: “The vision of RBS is to contribute to profit generating by reducing the amount of time employees spend on training activities and enabling employees to spend more time on revenue generating activities.”
“Strategy followed by RBS”: The strategy followed by RBS is simple and its concepts are well tested in this and other industries. Its implementation, constitutes one of the largest and most far reaching company restructurings yet seen globally.
RBS aims to be one of the world's most admired, valuable and stable universal banks. Driven by market-leading businesses in large customer-driven markets, it targets a 15%+ sustainable return on equity from a stable AA category risk profile and balance sheet. RBS focuses on its competitive strengths and they concentrate on each of its Core businesses. They focus on delivering the best services and try to improve them and make it better.
“What do we do”: Royal Bank of Scotland is one of the largest global banking and financial service provider who cater to its clients globally. Royal bank of Scotland offers a wide array of personal banking or consumer services, Business and Commercial services, Wealth Management services, Royal preferred banking services and corporate and Institutional services.
Consumer banking services: The bank focuses on fulfilling the financial needs of its clients and customers. They focus on developing a healthy relationship with its clients through “Relationship Banking” i.e. based on mutual trust and confidence. The services provided under this section is credit card, accounts, Islamic banking, deposits, personal banking.
Business banking: Businesses need financial services in their day to day dealing which is cash management, trade flows to expanding your business internationally. RBS provide innovative solutions and a global network to cater the business banking needs of its clients. RBS focuses on delivering the cutting-edge solutions needed by its clients to compete in today's fast-paced business environment. Through this customer facing business is supported. It provides operational technology, customer support in telephony, account management, lending and money transmission, global purchasing, property and other services. It helps in driving efficiencies and supports income growth across multiple brands. It also helps in leveraging the Group's purchasing power and is the Group's centre of excellence for managing large-scale and complex change. The services provided to customers through this are as follows:
Business Services creates value by achieving economies of scale, the application of shared platforms, specialised knowledge and working in partnership with each of the customer-facing divisions. RBS close working relationships across the Group ensure an alignment of the core business priorities with a better understanding of the allocation of costs, service pricing and business driven investment prioritisation. RBS focus is to deliver high quality service for the customer and continually to make the things we're good at, even better. Business Services also plays a key role in restructuring and lowering the Group's cost base and manages a sizeable, and in some areas long overdue, investment programme.
Royal preferred banking: This banking service is designed for most discerning individual. It caters the need of high status individuals who needs the best services and financial advice. The relationship manager helps them with from their day-to-day banking to long term investment planning. The services offered in this category are: The wealth management account, royal preferred banking credit card, current and saving account in all major currencies, multi currency time deposits as well as investment products such as mutual funds, long term saving plans, fixed income products etc.
Global banking and services: The bank also provides services globally as it operates globally. It provides a wide range of debt and equity financing, risk management and investment services to its customers. The global banking and service division follows six principal business lines: money markets; rates flow trading; currencies and commodities; equities; credit markets and portfolio management & origination. It offers global payments, cash and liquidity management, and trade finance and commercial card products and services.
Islamic banking industry is one the fastest growing sectors in the financial industry. RBS offers its clients comprehensive solutions in respect to Islamic banking by having one of the largest options for Islamic wealth management products in the region. Its objective is to offer a best offering in respect to Islamic Banking that is committed to the highest Shariah standards; to be a leading Shariah-compliant provider; to offer its clients products that have convenient access to banking which are in line with their beliefs and ethics.
According to (personal communication, July 29, 2008) the emergence of Islamic banking has made banking easy for customers interested in financial products and services which are in harmony with their religious beliefs. RBS understands the needs of their local communities, and the RBS Islamic Banking brand is able to meet customers' desire for Shariah Complaint Solutions. According to a report (RBS Islamic Banking, 2008) RBS Islamic Banking unit is a client driven institution which provides innovative solutions to cater to genuine customer needs. Central to their customers is their commitment towards adherence to Shariah which is evident through all their practices. RBS Islamic Banking commits to deliver only the best service standards through its presence across the country.
The bank caters its financial services to all the segments of the UAE, from an individual to group, from a middle class person to a high status individual.
Substitution of one product with another one increases the rivalry within an industry. It is difficult to find a perfect substitute of banks, the perfect substitute of banking services are not available but they have an option to choose between investing and saving their money. The individual can save their money at their home or in National saving centres. The individuals can also invest their money in the stock market.
There is tough competition among various banks. UAE has variety of public and private banks which are offering products on competitive prices. Rak bank was awarded as the best bank in Dubai for the year 209. There are several other Islamic banks which are preferred by the people there. NBAD, ADCB, RAK Bank, Loyalds TSB bank, Dubai Bank, First gulf bank etc are the few competitors of RBS in UAE. The tough competition among these banks gives rise to the challenges which the competitor banks have to face. The competition among various banks increases the switching of the customers form one bank's product to the other bank.
The banking sector of any country has always chances of growth and competition so many new banks enter and leave the market. Mostly foreign banks step in the developing countries for expanding their branches. But as UAE has undergone a financial crisis in 2009, the threat of new entrants is restricted.
Bargaining power of buyer is low where the products substitutes are not available and customers are large in number. In case of banks there are lots of other banks and banking intermediaries, having wide range of products, so power of buyer in banking sector is high. The bank can not force any customer to buy the desired product because this directly affects its reputation, but can convince its customers by giving them special discount or rewards.
There are no suppliers in banking sector, so there is no bargaining power of the suppliers.
UAE has one of the most unique and unusual economies in the world. The economy of UAE is driven by oil and gas the other contributor to UAE's economy is Real estate and construction. Due to the ongoing global financial crisis of 2008-09, the economy of UAE faced a major downturn. This economic crisis led to huge amount of foreign debts. The economy of any country influences financial institutes badly. RBS was also affected by the economic downturn.
As the economy of the world was affected, many businesses failed and there was drastic increase in the rate of unemployment. The recession hurt many customers of RBS, with unemployment, it led to market deterioration in credit quality. The bank had to adopt squeeze the interest rates which affected several saving products. Many customers had to close their accounts and many customers were not able to pay off the loans that were taken by RBS. Thus, RBS incurred losses due to the economic downturn.
The strategy of adopted by RBS is well tested in banking as well as other industry. The company follows restructuring. It aims to be the world's most admired, valuable and stable universal banks. RBS targets 15% + sustainable returns on equity from a stable AA category risk profile and balance sheet. It is focusing on the ways to reduce the risks associated with balance sheet and funding exposures through massive restructuring. RBS is focusing on re-engineering cost structures and on overdue business investment.
RBS has to plan future on conservative basis, so that it is able to recover form the losses it has incurred because of the economic downfall.
RBS should design its strategic plan in such a way that will help in reducing the risk and create value.
There are different marketing strategies such as product differentiation, cost leadership, market segmentation.
Differentiation is aimed at the broad market, this strategy involves the creation of a product or services that are unique. Generally, the company charges premium for such products. Product differentiation is an important aspect of marketing. Differentiation can be associated with design, brand image, technology, features, dealers, network, or customer service. This strategy helps in earning above average returns in a specific business. Product differentiation is generally developed on the basis of new technology and research. Product differentiation helps in creating a competitive advantage for the seller, as the product is unique. Examples of the successful use of a differentiation strategy are Apple Computer, and Mercedes-Benz automobiles. Apple have developed a product I-paq which is different from the other products, thus creating a competitive advantage.
A product can be differentiated on several basis such as: form i.e. shape, size or physical feature of the product; features of the product i.e. features other than the basic features example a mobile phone offering other features such as camera, music, in-built gaming softwares; performance quality i.e. a product generally have four performance quality i.e. low, average, high and superior; Conformance quality i.e. the product specify or meets the specifies quality; Durability i.e. a product should have good operating life under natural conditions; Reliability i.e. the product will not be malfunctioned; Reparability i.e. the product can be repairs and maintained easily.
This strategy focuses on efficiency. Company following this strategy produces high volumes standardized products. It helps the firm to achieve economies of scale. The product marketed are generally of low cost in comparison to its competitors. The company focuses on achieving lower prices than its competitors so as to win large market share. The company strives hard to achieve low production, marketing and distribution cost. The firms that are good at engineering, purchasing, manufacturing, and physical distribution must follow this strategy.
Wal-Mart and Dell are the companies which follow low cost leadership.
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