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Assignment On Marketing Mix
of HSBC
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International Marketing
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Prof.Uddeepan Chatterjee

Group No 4

Executive Summary
This report provides the details of the new HSBC current account
package. A marketing plan devised from the 7Ps is outlined below
to provide a practical and feasible way to implement the new
current account package. Numerical targets and qualitative
targets are stated clearly as objectives. Further details on the
research required during the pre and post-implementation stage
is discussed in detail.
Objectives
This marketing plan aims to define the means of notching up
HSBCs current account market share by 1.5% (960,000 current
accounts) from HSBCs current market share of 8.9%.
The new HSBC prepaid card that would be introduced will increase
the profitability of current accounts by encouraging customers to
save, hence making more funds available for further lending by
the bank.
The new current account package also aims at rebuilding
consumer confidence towards HSBC by portraying the bank as a
responsible and socially conscious financial institution.
The new current account package also aims and building up
HSBCs corporate image and branding theme of being global bank
with local knowledge by introducing new products that are in line
with the current economic downturn.
Marketing Strategy
HSBC should implement the market penetration and product
development strategy by capturing current account market share
from other financial institutions that have been weaken from the
economic crisis. Besides that, the launch of the new prepaid card
would be a step towards product development that would be

useful to counter non-traditional financial institutions that are

poise to enter the current account market.
The market development strategy can also be carried out at a
later date by bringing the new and tested prepaid card product
into other geographical markets like China and India. This would
be in line with HSBCs slogan of being the Worlds Local Bank
and would also take advantage of HSBCs global network in more
than 79 countries. In relation to the Porter Generic model, HSBC
should aim at using a broad based differentiation strategy to
capture market share from ailing financial institutions.
Marketing Mix
Marketing for financial services pose distinctive challenges to
marketers because services are intangible, inseparable and
cannot be inventoried. An expanded marketing mix is required to
fully answer the differences between product marketing and
marketing for financial services. The expanded marketing mix
aims to capture the distinctive nature of financial services (Booms
& Bitner, 1981).
Product
The product is the heart of the firms marketing strategy. Poorly
designed service products that do not create value for customers
are destined to fail regardless of how well the other 6 Ps are
executed. The goal of the product element is to create a service
concept that would offer more value to a market segment than
competitors. Working to transform this concept into reality
involves designing a cluster of different but mutually reinforcing
elements.
The product must be a means to solve a problem or satisfy a want
in the market. To date, overspending is a major issue in the
Western world. This is the reason why the new HSBC prepaid card
is included in the new current account package as a means to

ensure that customers do not overspend by ensuring prudential

budgeting of financial resources.

Unique Features:
Prepaid Card
HSBC will launch two prepaid cards, namely, the HSBCs Financial
Manager and the HSBCs Budget Manager prepaid card. Both
prepaid cards come preloaded with 10 after the customer pays
the initial card issue fee. The Financial Manager is a way to
manage a monthly budget by transferring your spending money
from your bank account onto the card. It has an annual load limit
of 15,000. The Budget Manager on the other hand has a smaller
annual load limit of 2,000.
The new HSBC prepaid cards would be fee-free while offering the
same flexibility as a credit or debit card. The prepaid card
however, would need to be loaded up with cash first before
allowing its users to purchase products and services. The prepaid
cards can also be used to withdraw money from cash machines.
Real Time Balance Alerts
Real time balance alerts will be sent to the customers mobile
device every time a HSBC prepaid card user purchases
something. This balance update will notify the prepaid card user
on the amount of money spent and the amount of money left for
free. HSBC may need to team up with companies like Vodafone to
provide this service.
Online Banking
Another unique element of the HSBC prepaid cards are their
flexibility in managing the customers financial resources. Bank
customers can access the HSBC website and set standing orders
on how much money to load onto the budget manager every
month as long as the funds are available in their current account.
Optional Savings Account

Bank customers that pay more than 500 into their current
account every month would qualify for the HSBCs Current
Account Advance. Regular payments can be made through the
internet or by direct standing order from the customers current
account to save a specific amount every month. This feature is
ideal for customers with a fixed monthly income.
Price
The pricing component plays twin roles for HSBC in the sense that
it must be able to first attract customers to purchase the service
and also generate revenue for HSBC. According to Adrian Palmer
(2008), there are five main factors that influence pricing
decisions,
namely,
profit
maximisation,
market-share
maximisation, survival, social considerations and personal
objectives.
While pricing strategy is highly dynamic for other products and
services, pricing for current account services have become rather
static in recent years. Most banks do not require any fees to set
up a current account. Banks instead rely on the money that floats
in the interval when they are deposited to when they are spent in
order to profit from current accounts.
It is unlikely that any increases in interest rates would be able to
attract customers to open up new current accounts with HSBC.
The base lending rate that is now at 0.5% provides little room to
manoeuvre for banks and other financial institutions. Adding to
that is the credit crunch and declining asset prices that makes
borrowing at a higher rate unattractive at the moment. The initial
prepaid card issue fee should be around 10. This is in line with
what competitors are charging at the moment.
The catch with the prepaid card scheme is that it encourages
bank customers to save. Any money that is saved is held within
the customers current account and remains available for banks to

provide further lending. This may prove to be highly beneficial to

HSBC during times when raising new capital is extremely difficult.
Place
The place element involves delivering the product element to
customers through appropriate methods and delivery channels.
Delivery may involve both physical and electronic channels.
Failure to make a service product readily available to customers
would guarantee its failure regardless of how good the service
product is. The new current account package would be made
readily available throughout HSBCs 1,492 branch network and
also through the internet.
Promotion
The promotion element relies on effective communications to
bring awareness in the market of the service products offered by
HSBC. The three objectives of the promotion element are to gain
the attention of customers, provide additional information and
persuade customers to purchase the product. Advertising is mass,
paid communication that is used to transmit information, develop
attitudes and induce some form of response on the part of the
audience (Adrian Palmer, 2008).
The choice of media that would be utilised includes newspapers,
magazines, outdoor advertising and the internet. A sales
promotion will also be carried during the first three weeks after
the launch date to help stimulate customer purchase and the
effectiveness of intermediaries (Adrian Palmer, 2008). Other
promotional materials include press releases, posters and
brochures.
People
Despite technological advances, many financial services still
require direct interaction between customers and bank

employees. The nature of these interactions strongly influences

how customers perceive service quality (Hartline & Ferrell,
1996). This is particularly true for financial services as employees
are often the first line of contact with the customer.
Due to the importance of this element in the marketing mix,
special attention needs to be given to the training of employees
concerning the new current account package. The prepaid card
concept also requires some serious attention as its aim is to show
HSBCs change of stance concerning the psychology of spending.
Training should only be given to bank staffs that are directly
involved in the new current account package. However, back
office staff must also be formally notified concerning this new
current account package to ensure that the entire organisation
have a coherent understanding on the banks products and
services. Besides that, training of IT personnel must also be
stressed as new information systems may have to be put in place
before the launch of the new product.
Physical Evidence
It is generally recognized that physical evidence can be
subsidized into two components (Shostack, 1982): peripheral
evidence which can be possessed by the consumer but has little
independent value and essential evidence, which cannot be
possessed by the consumer but has independent value.[9] The
peripheral evidence is the prepaid card itself while the essential
evidence includes bank branches, cash machines, posters and
brochures.
Process
The process element focuses on the mechanisms by which the
service is delivered, including business policies for service
provision, procedures, degree of mechanization etc. It is

imperative that the policies and procedures are written and tested
before the launch of the new current account package.
Bank personnel are to conduct a test to determine how efficient
and effective front line staffs are at explaining the new current
account package and setting up new current accounts. A step by
step guide on how to set up a new current account and prepaid
card system is to be issued to all front line staff to ensure that no
confusion is to occur during the critical launch date.
Besides that, front line staff should also be constantly monitored
to ensure that the delivery of services occur smoothly. Customer
feedback and complaints should be welcomed as they would
provide the input needed to continuously improve service delivery
and customer satisfaction.

Market Segmentation
Major segmentation variables for consumer markets

Geographical Region

First by countriesSecond by different geographical regions of

the United Kingdom

City or metro size

Under 5000; 5000-20,000; 20,000-50,000; 50,000-100,000;

100,000-250,000;
250,000-500,000;
500,000-1,000,000;
1,000,000-4,000,000; 4,000,000 or over

Density

Urban, suburban, rural

Demographic age

Under 6, 6-11, 12-19, 20-34, 35-49, 50-64, 64+

Family life cycle

Young, single; young married, no children; young, married,

youngest child under 6; young, married, youngest child 6 or
over; older, married, with children; older, married, no children
under 18; older, single; other

Gender

Male, Female

Income

Premier, Plus and Basic Accounts

Occupation

Professional and technical; managers, officials and proprietors;

clerical sales; craftspeople; forepersons; operatives; farmers;
retired; students; homemakers; unemployed

Education

Grade school or less; some high school; high school graduate;

some college; college graduate

Generation

Baby boomers, Generation X, Generation Y

Social class

Lower lowers, upper lowers, working class, middle class, upper

middles, lower uppers, upper uppers

The cost of using prepaid cards

Card

Initial
card
issue
fee

Monthly
fee

Charge
for
ATM
withdraw
als

Charge
for
purchas
es

Cost to
reload
the
card

HSBC PREPAIDVisa Card

9.99

Nil (But
annual
fee
of
5.00

Nil

Nil

Free

Virgin prepaidMasterCard

9.95

Nil

2.95%

2.95%

Free at
post
office
or via
bank
transfe
r

Cash plus GoldMasterCard

4.95

4.95

99p

Nil

Free

TuxedoMasterCard

9.95

4.99

50p

Nil

99p at
post
office
or free
via
bank
transfe
r

The BREAD cardMaestro

10.00

Nil

1.50

2.00%

Free at
post
office

OptimumMasterCard

9.95

4.95

1.50

Nil

Free at
post
office
or via
bank
transfe
r

Splash PlasticMaestro

5.00

Nil (But
4.95
annual

1.50
(plus 2%
for

2.5%

30p
per
100

fee)

withdraw
als over
50

loaded
at post
office