Branding and brand development through direct marketing in the consumer financial services sector: LITERATURE REVIEW

Branding in the financial services sector

A brand definition that recognises the brand in the service domain and the brand’s role in securing brand commitment, or a resistance to switching, is made by de Chernatony and McDonald:

‘A successful brand is an identifiable product, service, person or place, augmented in such a way that the buyer or user perceives relevant, unique added values which match their needs closely. Furthermore, its success results from being able to sustain these added values in the face of competition.

De Chernatony and McDonald also note an increasing trend towards stressing the company as brand. When discussing brand in a financial services context, in most cases this means the company or corporate brand, the highest level in Keller’s (1999) brand hierarchy. ‘Product brands in financial services are relatively few and far between, at least on this side of the Atlantic. Morrison (1997) states that ‘The banking and financial services industry has long been characterised by monolithic identities’. Saunders and Watters (1993) and Morrison (1997) also underline the difficulty of achieving differentiation at the banking product level, since product attributes in this sector can be copied so quickly.

A review of the literature on consumer financial services and image finds a positive link between bank position, reputation or image and loyalty. Supporting Dick and Basu’s (1994) proposition that ‘a weak but positively differentiated attitude may be more likely to lead to loyalty than a very positive but undifferentiated attitude’, Yavas and Shemwell (1996) bear out the importance of strategic differential advantage for the banking sector, also quoting Leonard and Spencer (1991) when stating that ‘It has long been recognised that a bank’s reputation is not absolute but rather relative to competitors’.

Simply achieving a level of brand awareness or differentiation, takes time and investment where mass markets are concerned, as newcomers to personal financial services are finding. ‘Who can differentiate between credit cards such as Advanta, People’s Bank and BankOne and all the other new players except on the basis of this month’s promotional rate?’ Also, according to DMIS (2000a), ‘Newer card issuers have not achieved the same level of recall [as the highest DM volume card providers], with 6 per cent naming Capital One and only 2 per cent Bank One’.

Several research papers confirm the consumer’s narrow banking repertoire, averaging a ‘main institution’ plus one or two other ‘relationships’, for banking purposes. In retail banking, Levesque and McDougall (1996) divide service quality into ‘core’ (including accuracy, meeting promises etc) and ‘relational’, but research shows that the desired level of closeness of relationship between consumers and commercial firms can vary. This paper, therefore, examines the extent to which marketers of financial services are able to use branding in direct marketing strategically to assist in developing a ‘preferred friend’ status.

It is appropriate to refer here to Fournier’s (1998) research which describes the brand itself in terms of a relationship partner. De Chernatony and McDonald  support this perspective, stating that brands can be ‘relationship builders’, developing different relationships with customers. Fournier (1998) identifies five central components of ‘brand partner quality’. Two components are highlighted here as particularly relevant for the financial services context: ‘making the consumer feel cared for’ (eg for low involvement products like car or home insurance); and ‘trust that the brand will deliver what is desired as opposed to what is feared’ (for risker products like pensions and long- term investments).

So how might financial services direct marketers address these branding issues? Some help might come from commercial brand-building models.

Brand-building tools

Brand consultancies use varying brand matrices to address brand building, including Brandbuilder for service- based industries. Hawkes (1999b) offers three principles for ‘image building’ in communications: consistency, frequency of visibility and relevance. Two commercial models outlined in academic literature are also relevant here. The first contains four pillars of brand building, through which a brand’s strength or weakness in any sector can be examined; it is described by Agres and Dubitsky (1996), and based on Young & Rubicam’s Brand Asset® Valuator project. The four pillars are: Differentiation; Relevance; Esteem (how highly consumers regard the brand); and Knowledge (‘not only being aware of the brand but also a consumer belief that there is an understanding of what the brand stands for’).

A similar model, which has been applied specifically to the financial services sector, although descriptions of its dimensions appear surprisingly product related, is the Brand Dynamics Pyramid. This model presents five components as the hierarchical levels of a pyramid: 1) presence; 2) relevance; 3) performance; 4) advantage; and 5) bonded. The lowest level in the pyramid, brand presence, is a familiarity with the brand without which there is unlikely to be much trial. Relevance is the second component of brand strength (as in the four pillars model). Performance follows: ie whether the product performance is perceived to be acceptable. Advantage, or ‘a distinctive product positioning’ is the next level, which closely ressembles differentiation, previously defined more broadly as ‘setting the brand apart from others’ in the four pillars model.

The highest level in the pyramid model is where consumers are bonded or feel it is the only brand capable of fulfilling key requirements. This dimension has been defined in the marketing literature variously as brand commitment, ‘true loyalty’, or ‘preference loyalty’, but generally brand commitment is regarded, like trust, as a key variable in relationship marketing, which can be experienced to varying degrees on a dynamic continuum, rather than as the final rung on a loyalty ladder.

 

Representative APR 391%

Let's say you want to borrow $100 for two week. Lender can charge you $15 for borrowing $100 for two weeks. You will need to return $115 to the lender at the end of 2 weeks. The cost of the $100 loan is a $15 finance charge and an annual percentage rate of 391 percent. If you decide to roll over the loan for another two weeks, lender can charge you another $15. If you roll-over the loan three times, the finance charge would climb to $60 to borrow the $100.

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