Moment of truth 20071022

MUC-90007-043-16-01.ppt 1

THE MOMENT OF TRUTHfor financial services brands

Rome, October 22nd, 2007

Kai Howaldt, Maurizio Panetti

MUC-90007-043-16-01.ppt 2

Contents Page

A. Introduction to our understanding of brand management andmarketing – based on the RB Profiler approach 3

B. Challenges in financial services branding and marketing 15

C. The Moment of Truth for financial services brands– Summary

27

This document was created for the exclusive use of our clients. It is not complete unless supported by the underlying detailed analyses and oral presentation. It must notbe passed on to third parties except with the explicit prior consent of Roland Berger Strategy Consultants.

MUC-90007-043-16-01.ppt 3

A. Introduction to our understanding of brandmanagement and marketing– based on the RB Profiler approach

MUC-90007-043-16-01.ppt 4

Why branding and customer oriented marketing infinancial services industry matters

Source: Roland Berger

PASTFinancial services brands tend to bepositioned as brands for everybody

FUTUREFocus on specific customer groups andcorrespondingly a clear brand positioning

National brands with nationalcustomers

Global brands operating on internationalmarkets with balanced brand portfolios

Customer segmentation and marketingmix based on demographics (income,age, marital status, etc.)

Customer segmentation and marketing mixbased on understanding of customerneeds, supported by socio-demographics

A major paradigm shift in the financial services industry is necessary

As a brand for everybody, the need forbrand engagement is very limited

As a clearly positioned brand, consequentbrand engagement is a key success factor

MUC-90007-043-16-01.ppt 5

CUSTOMER• Values, needs• Preferences• Desires• Aspirations

PERCEPTION

The individual absorbsa brand's promises andprojections, tests it(unconsciously) againsthis/her individual valueand need profile

BRAND• Brand Communication• Functional attributes• Brand name, symbols• Users (peer group)

PROJECTION

By all marketing activities,esp. communication anddesign, or by its user peergroup a brand addresses acertain set of values andtransports a brand promise

Source: Roland Berger, Brand Congruity Theory

The Moment of Truth= Fit between perception and projection

BUYFIT

NOT BUYNO FIT

BRAND MANAGEMENT

Our brand philosophy is based on the congruity ofcustomer and brand values

MUC-90007-043-16-01.ppt 6

QUANTITATIVE DATA BASE VALUE SYSTEM

Enormous pool of quantitative data availablefor economic assessment, product- andservice-design, marketing campaigns etc.• Existing databases from > 200 projects• Individual market researches• In Germany: "Typologie der Wünsche"

20 general B2C consumer values in sixspecific clusters describe the needs ofpeople or the values addressed by brandsThe RB Profiler value system is the result ofextensive research, many years of brandingexpertise and continuous refinement

1 2


Socio-demographic

data

Socio-economic

data

Product-/brand aware-ness & usage

Consumptionbehavior

Interests &Attitudes

Values, needs& desires

BRAND MANAGEMENT

Two elements of customer understanding:a quantitative database plus a holistic value system

MUC-90007-043-16-01.ppt 7

Purism NatureFair

Altruism

SmartShopping Total Cost

Moneyism

ProvenProvenServiceQualitySecurity

Traditional Performance

ClassicPrestigeTranquil Clanning Vitality

Traditional Hedonism

CarefreeCool &Trendy

Thrill &Entertainm.

Progressive Hedonism

PersonalEfficiency

Innnovation/ProtechCustomized

Progressive Performance

E

SmartShoppingSmart

Shopping

Total CostTotal Cost

NatureNature

FairFair

PurismPurism TranquilTranquil

Thrill&Entertainm.

Thrill&Entertainm.

Cool&TrendyCool&Trendy

CarefreeCarefreeVitalityVitality

ClanningClanning

PrestigePrestige

ClassicClassic

CustomizedCustomized

PersonalEfficiencyPersonalEfficiency

Innovation/Protech

Innovation/Protech

ServiceService

QualityQuality

ProvenProven

SecuritySecurity

R


BRAND MANAGEMENT

20 general customer values measure the needs ofcustomers and the values addressed by brands

MUC-90007-043-16-01.ppt 8

E

R

"PETER"ICP – Individualcustomer profile

(ID 0335)

"PETER"ICP – Individualcustomer profile

(ID 0335)


INTERPRETATIONINTERPRETATION

• Peter is a very modern,progressive person

• He finds new, innovativetechnology very thrilling anddemands customized,service-oriented and top-quality products

• Money is not an issue forPeter – he is ready to spend

• Classical or ethical values donot matter for Peter – he isopen to new things and doesnot worry about society or theenvironment

BRAND MANAGEMENT

All customers have individual needs, values anddesires than can be measured and visualized

Example: Individual customer profile "Peter"

No. of level linesindicates statisticalsignificance in relationto the peer group

Values that Peteragrees with – i.e. hispreferences, desires

Values that Peter doesnot agree with – i.e.his dislikes

SmartShoppingSmart

Shopping


NatureNature

FairFair

PurismPurismTranquilTranquil

Thrill&Entertainment

Thrill&Entertainment

Cool&TrendyCool&Trendy

CarefreeCarefree

VitalityVitality

ClanningClanning

PrestigePrestige

ClassicClassic



ProtechProtechServiceService

QualityQuality

ProvenProven

MUC-90007-043-16-01.ppt 9

MaximalistsMaximalistsPerformersPerformers HumanistsHumanists DreamersDreamers

TraditionalistsTraditionalistsHedonistsHedonists MinimalistsMinimalists IndividualistsIndividualists

E

+–

R


INDIVIDUALS VALUES-BASED CONSUMER ARCHETYPES

…

Fun-oriented, cost-sensitive consumers E

+–

R

E

+–

R

E

+–

R

E

+–

R

E

+–

R

E

+–

R

E

+–

R

BRAND MANAGEMENT

Identifying consumers with homogenous needs andbehavior is the starting point for a brand strategy

Example for homogenous consumer Archetypes

18,6%18,6% 16,5%16,5% 13,9%13,9% 12,5%12,5%

9,3%9,3% 8,8%8,8% 8,4%8,4% 7,9%7,9%

MUC-90007-043-16-01.ppt 10

• Strong minimalistic profile• The main assets of the brand

are low prices and goodvalue-for-money

• The brand does not offer anyemotional stimuli and doesnot convey a high level ofcomfort and efficiency

Douglas

• Strong emotional profile• The brand addresses both

traditional hedonistic valueslike Prestige or Classic andprogressive values

• Altruistic values like Fair andNature are also attracted

• Cost values are not attracted

BMW

• Strong maximalistic profile• Focus on traditional and

progressive performancevalues as well as emotionalhedonism

• Cost-sensitive values are notaddressed at all

BRAND MANAGEMENT

The values conveyed by a brand can also bemeasured – in the same way as consumer values

Examples – Actual Brand Perceptions

Source: Roland Berger, BCN Typology of Desires (Germany 2007)

Lidl

MUC-90007-043-16-01.ppt 11Source: Roland Berger

CONSUMER "BEN"BRAND PROFILES

• Peter likes innovativetechnology, customizedproducts and good service.He is neither a responsibleperson nor price-sensitive

• Peter drives a BMW – it isexpensive, but stands forinnovation and quality

• Ben is a serious andaltruistic person. He is veryconcerned with society andthe environment

• Ben drives a Toyota – itaddresses his needs forecological and socialresponsibility

BUY

�

��

�BUY

BRAND MANAGEMENT

There is a strong correlation between brand pro-files, customer values and consumption behavior

FIT NOFIT

FITNOFIT

Understanding consumption behavior

CONSUMER "PETER"

MUC-90007-043-16-01.ppt 12

PRA

LEI

KOM

KNS

HED

PERFORMANCE

INDIVIDUALISM

TRADITION

Archetype Brand positioning

ANS

Toyota

Opel

Audi

Mercedes-Benz

BMWFord

Peugeot

VW

Renault

Skoda

Strategic Situation –Example: Automotive Germany

Methodology

The analysis of the competitiveenvironment allows to answer a series ofhighly relevant strategic questions:• Which consumer Archetypes do my

brand(s) and the competitors' brandsaddress?

• Is my brand portfolio positioned in a waythat allows maximal marketdevelopment with minimal risk ofcannibalization?

• Do any market gaps exist that arecurrently not occupied at all?

• Which positioning options exist andwho would my main competitors be?

Source: Roland Berger; Roland Berger Market Research, Typologie der Wünsche Trend 07/08

By visualizing the complete competitiveenvironment strategic options can be derived

BRAND MANAGEMENT

MUC-90007-043-16-01.ppt 13

PRA

LEI

KOM

KNS

HED

PERFORMANCE

INDIVIDUALISM

TRADITION

Archetype Brand positioning and sales development

ANS

Strategic Situation –Example: Automotive Germany

Methodology

A strong, differentiated brand and aclear, consistent target group focus arecrucial pillars of economic success• The figure on the left side combines the

joint space strategic map with a graphicillustration of the sales developmentover the last 10 years

• Result: Brands with a clear target groupfocus and a differentiated brandpositioning are clearly more successful

Source: Roland Berger; Roland Berger Market Research, Typologie der Wünsche Trend 07/08

A strong, focused brand positioning is a crucialfactor for the economic success of every brand

BRAND MANAGEMENT

Sales increase – growth >1% p.a.

Constant sales.

Sales decrease – growth >1% p.a.


MARKETS & CUSTOMERS BRANDING

MEASUREMENT & CONTROLLING MARKETING & SALES

Target

Gain &Retain

Under-stand

Track

Momentof truth

Superior marketing strategies are therefore basedon superior understanding of the customer

Applications

• Market and customer segmentation• Economic assessment of

customer segments• Fundamental insights into

customer values• Market analyses

• Actual brand perception• Brand positioning• Brand strategy• Brand portfolio management• Brand architecture• Brand extension

• Measurement of effectiveness andefficiency for marketing & sales(Retail, POS)

• Brand & Marketing KPIs• Campaign & response measurement• Marketing funnel (transparency & tracking)

• Product portfolio breath• Campaign management• Product- and service-design• Loyalty concepts• POS/ assortment strategies

• Pricing and marketing communication strategy

BRAND MANAGEMENT

MUC-90007-043-16-01.ppt 15

B. Challenges in financial servicesbranding and marketing

MUC-90007-043-16-01.ppt 16

Banks’ brand architecture can vary and is the resultof different drivers and decisions

Source: analysis Roland Berger

• Organic versus nonorganic growth

• Segmentation strategy• Organization structure• “Institutional”constrains

Drivers

PRELIMINARY

Domestic retail branding complexity index

• Consistency withbusiness strategy/objectives

• Campaign/ advertisingspend effectiveness

• Managed targetingversus inertialproliferation

Key questions

1,52

44,555,5

77,5888,5

9,59,5

10,515

2028,5

31,532,5

33,535,5

45,5

ABN Amro

Barclays

Deutsche Bank

Fortis

HSBC Group

Allianz Group

UBS

ING

Commerzbank

Groupe Crédit Agricole

Lloyds TSB

BNP Paribas

Grupo Santander

BBVA

UniCredit Group

HBOS Group

Gruppo Capitalia

MPS

Banco Popolare

Royal Bank of Scotland

Intesa San Paolo

UBI Banca

MUC-90007-043-16-01.ppt 17

There are five key challenges in financial servicesbranding and marketing


12345

Superior understanding of customers and target groups

Brands with systematic customer focus

Consistent international brand management

Internal brand engagement

External brand execution

MUC-90007-043-16-01.ppt 18Source: Roland Berger; BCN Typologie der Wünsche 1997 - 2006

Consumer group with largelyhomogeneous sociodemographics, e.g.• Age• Household net income• Household size• Marital status• etc.

Funds owners – 1996 Funds owners – 2006

Inhomogeneous sociodemographics –diversity of sociodemographics withinconsumer group is constantly increasing1):• Age + 42%• Household net income + 98%• Household size + 25%• Marital status + 36%• etc.

UNDERSTANDING CUSTOMERS AND TARGET GROUPS

Sociodemographics are loosing importance forapplicable consumer segmentations

Decreasing homogeneity of consumers – example funds owners

1) 1997 to 2006

1

MUC-90007-043-16-01.ppt 19Source: Roland Berger; BCN Typologie der Wünsche Trend 07/08 (n=10,083; population 14 years and older)

Sociodemographic approach Value-based approach

Similar sociodemographics,different value sets

Different sociodemographics,similar value sets

One target group One target group

female35 yearsSaleswomanmarried



TARGET GROUP:"Female marriedsales-personnel,age 30-40 years"

male48 yearsLawyersingle

female33 yearsTeacherdivorced

male63 yearsEngineermarried

TARGET GROUP:"Traditional,performance-oriented, cost-insensitivecustomers"

Values drive consumption behavior – value-basedmodels allow to predict consumption behavior

Sociodemographic and value-based customer segmentation

UNDERSTANDING CUSTOMERS AND TARGET GROUPS1

MUC-90007-043-16-01.ppt 20

Rejection ofaltruism andpurism, lowcost-sensitivity

Emotionalappeal,progressiveperformance

Value profile:Maximalists

Attraction of different bank brands

BRANDPROFILE

… within Germanpopulation 7,5%

…within bankcustomer base 13,5% 7,6% 3,1%

Maximalists…

Over-/Under-representationof Maximalist

Source: Roland Berger; BCN Typologie der Wünsche Trend 07/08 (n=10,083; population 14 years and older)

Customer focus is the silver bullet to allure themost attractive customer segments

Impact of brand positioning on customer base – example from Germany

+80,0%

+1,3%

-58,7%

SYSTEMATIC CUSTOMER FOCUS2

MUC-90007-043-16-01.ppt 21

Banking Germany,development 2000 - 2007

KEY INSIGHTS

Source: Roland Berger; Roland Berger Market Research; BCN Typologie der Wünsche

Customer focus has greatly increased in recentyears – balanced brand portfolios gain importance

• On the German banking market, astrongly increasing customer focus canbe perceived

• From 2000 to 2007, almost all brandshave significantly sharpened theirrespective brand profiles and are nowmuch more focused on specific customerArchetypes

• In order to still allow maximum marketcultivation despite a more focusedcustomer approach, a balanced brandportfolio becomes more important

• Different sub-brands for different targetgroups allow a broad market approachwithout diluting the brand

IndividualistsPerformer

Hedonist

Maximalist

Dreamer

Humanist

Minimalist

Traditionalist

Sparkasse

Hypo Vereinsbank

Volks-/Raffeisenbank

Citibank

Dresdner Bank

Archetype Brand positioning 2000 Brand positioning 2007 Brand migration

DeutscheBank

2 SYSTEMATIC CUSTOMER FOCUS

MUC-90007-043-16-01.ppt 22

19%

10%

7%

MinimalistTypes

13%

9%

• Unpretentious• Serious• Minimalistic

6%CN 25%

9%ESP 10%

21%RO 23%

MaximalistTypes

8%

• Maximalistic• Cost-

insensitive

Source: Roland Berger; various market researches

GER

…

Typicalvalue profile

ConsumerType

…

…

…

…

…

ShortDescription

HedonistTypes

10%

• Fun-seeking• Cost-

sensitive

11%

17%

5%

TraditionalTypes

10%

• Traditional• Cost-

insensitive

9%14%CZ 20%

Across the world, homogeneous consumersegments exist – but still, every country is unique

Split of consumer Archetypes per country [% in population]

INTERNATIONAL BRAND MANAGEMENT3

…

…

MUC-90007-043-16-01.ppt 23

Successful international brands display a consis-tent brand profile with only minor differences

Source: Roland Berger; Ipsos, Metris, Emnid

Nike – United Kingdom Nike – Portugal Nike – Germany

Highly consistent brand profile across the different countries – minor differencesin value perceptions and intensities


MUC-90007-043-16-01.ppt 24

Examples for international financial services brandsBRAND A (ESP, POL, RO) BRAND B (AUT, CZ, HUN)

HUN

CZ

AUT

Very individualbrand image withinthe differentcountries:

• Quality focus andmedium prices inAUT

• Efficient andcustomizedsolutions in CZ

• Emotional<Vitality>-focusand premium-prices in HUN

RO

POL

ESP

Highly consistentbrand image acrossthe differentcountries:

• Rational brandfocus

• Focus onefficiency,innovation andquality

• Self-consciouspremium pricing

Source: Roland Berger; various market researches

International brands need an international position –some brands are consistent while others are not



E+E-

R+R-

E

R

SmartShoppingSmart

Shopping


NatureNature

FairFair


Thrill &Entertainment


Cool & TrendyCool & TrendyCarefreeCarefree

VitalityVitality

ClanningClanning

ExpressionExpression

ClassicClassic




QualityQuality

ProvenProven

SecuritySecurity

E+E-

R+R-

E

R

SmartShoppingSmart

Shopping


NatureNature

FairFair





VitalityVitality

ClanningClanning


ClassicClassic




QualityQuality

ProvenProven

SecuritySecurity

E+E-

R+R-

E

R

SmartShoppingSmart

Shopping


NatureNature

FairFair





VitalityVitality

ClanningClanning


ClassicClassic




QualityQuality

ProvenProven

SecuritySecurity

SEN

IOR

MA

NA

GEM

ENT

MA

RK

ETIN

G



E+E-

R+R-

E

R

SmartShoppingSmart

Shopping


NatureNature

FairFair

PurismPurism TranquilTranquil Cool & TrendyCool & TrendyCarefreeCarefree

VitalityVitality

ClanningClanning


ClassicClassic




QualityQuality

ProvenProven

SecuritySecurity

MID

DLE M

AN

AG

EMEN

TC

USTO

MER

SERVIC

E

Differentunderstanding ofthe actual brandmission prevents aconsistent brandpositioning

PROBLEM:

KEY QUESTION:

Excellent brand engagement starts with a commonunderstanding of the brand "mission"

Anonymous financial services example: "What does our brand stand for?"

"Who do we actuallywant to be?"

INTERNAL BRAND ENGAGEMENT4

MUC-90007-043-16-01.ppt 26

Target Value Proposition Implementation in services

• Highest efficiencyand comfort

• Excellent service• Promotion of vitality• Carefree services• Premium price

Sales approach

• We handle all customer inquiriesimmediately

• "We'll take care of that at once"

• Swift clarifications: We makeprecise appointments

• "I will let you know by tomorrowafternoon "

• To greet a customer, we stand upand call the customer by his/ hername

• "Good afternoon Mr. Smith. Whatcan we do for you today?"

• We say friendly and supportivegood-byes

• "I am happy that I was able tohelp you, Mr. Smith"

• We relieve the customers of workand worries

• "Don't worry – we'll remind you ofthe deadline "

• We never communicate internalproblems towards the client

• "No problem, we always do ourbest to help you.


A brand strategy has to be consequently integratedinto day-to-day business processes…

Example: Implementation into day-to-day sales business

EXTERNAL BRAND EXECUTION5

MUC-90007-043-16-01.ppt 27

• Monobrand stores• Concept stores• Presence in wholesale

chains• Mail order business

Product/ Price Store design

• Looks, styles andcuts

• Colors and quality offabrics

• Accessoires• Prices

• POS design• Key visuals• Product presentation• Store window themes


• Advertising campaign• PR activities• Testimonials• Event sponsoring

Cool&Trendy

NatureNature

SmartShoppingSmart

Shopping

ProvenProven


Thrill&FunThrill&Fun


FairFair

PurismPurism New&CoolNew&Cool

CarefreeCarefree

VitalityVitality

TranquilTranquil

QualityQuality

ServiceService

ClanningClanning

PassionPassion

ClassicClassic


24/7Protech

24/7Protech

NatureNature

SmartShoppingSmart

Shopping

ProvenProven


Thrill&FunThrill&Fun


FairFair

PurismPurism New&CoolNew&Cool

CarefreeCarefree

VitalityVitality

TranquilTranquil

QualityQuality

ServiceService

ClanningClanning

PassionPassion

ClassicClassic


24/7Protech

24/7Protech

E

+–

Solidarity Stimulation

SolutionsPrice R

E

+–

Solidarity Stimulation

SolutionsPrice R

NatureNature

SmartShoppingSmart

Shopping

ProvenProven

CustomizedCustomizedTotal CostTotal Cost

FairFair

PurismPurism

CarefreeCarefree

VitalityVitality

TranquilTranquil

QualityQuality

ServiceService

ClanningClanning

ClassicClassic


ProtechProtech

NatureNature

SmartShoppingSmart

Shopping

ProvenProven

CustomizedCustomizedTotal CostTotal Cost

FairFair

PurismPurism

CarefreeCarefree

VitalityVitality

TranquilTranquil

QualityQuality

ServiceService

ClanningClanning

ClassicClassic


ProtechProtech

Thrill&EntertainmentThrill&EntertainmentThrill&FunThrill&Entertainment

Cool&TrendyCool&TrendyCool&Trendy

PrestigePrestigePrestigePrestige

SecuritySecurity

Profile 2007Profile 2003

RESULTS

…and to be consistently implemented through allelements of the marketing mix

Marketing implementation and results – example from fashion industryIMPLEMENTATION ACTIONS

Communication Distribution

5

Store Design 2007Store Design 2003

etc.

EXTERNAL BRAND EXECUTION

MUC-90007-043-16-01.ppt 28

C. The Moment of Truth for financial servicesbrands – Summary

MUC-90007-043-16-01.ppt 29

Superior understanding of customers and target groups – values as the real drivers forconsumption behavior in financial services backed up with sociodemographic data1


2 Brand positioning with systematic customer focus – a brand for everybody will not besustainable in the future

The moment of truth for financial services brands –elements of a paradigm shift

SUMMARY

Balanced international brand management – international brands with consistent corevalues and/or differentiated (national) brand portfolio3

4 Internal brand engagement – with a more focused brand positioning, systematic brandengagement becomes the key success factor

5 External brand execution – every element of the marketing-mix has to be aligned with thetarget segments and the brand value proposition to maximize effectiveness and efficiency


2

Brand positioning with systematic customer focus – a brand for everybody will not besustainable in the futureThe positioning of a brand directly influences the customer base – the silver bullet to allureeconomically attractive consumers. As a result, a distinct increase in customer focus could beobserved in the financial services industry in recent years

The moment of truth for financial services brands –elements of a paradigm shift (1/3)

SUMMARY

Superior understanding of customers and target groups – values as real drivers forconsumption behavior in financial services backed with sociodemographic dataThe (sociodemographic) diversity of customers is increasing. Values are the real drivers ofconsumption – they are stable, can be used for consumer segmentations and allow a reliableprediction of consumption behavior. They are the real key to superior global marketingstrategies

1


4

Internal brand engagement – with a more focused brand positioning, systematic brandengagement becomes the key success factorAn excellent brand execution needs a common understanding of all involved parties ("Whodo we want to be?") and requires a stringent brand engagement process throughout thewhole organization


SUMMARY

Balanced international brand management – international brands with consistent corevalues and/or differentiated (national) brand portfolioBasic value-based consumer Archetypes could be identified globally. Still, every country isunique – the distribution of the Archetypes varies greatly. International brand managementremains a major challenge for the future

3



SUMMARY

External brand execution – every element of the marketing-mix has to be aligned withthe target segments and the brand value proposition to maximize effectiveness andefficiencyA consistent implementation of a defined brand strategy through the marketing mix and theintegration into all aspects of day-to-day business are the success factors for a consequentbrand execution

5

Moment of truth 20071022

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