Wednesday, December 23, 2015
Module Name: Relationship Marketing
OPEN UNIVERSITY MALAYSIA
FACULTY OF BUSINESS MANAGEMENT
BBMR 4103
RELATIONSHIP MARKETING
Name: Adam Khaleel
Lecturer: Hussain Sunny Umar
Learning Centre: Villa College
Trimester: May 2013
Contents
1.0 Executive Summary
The assignment will mainly talk about the relationship marketing strategies adopted in Bank of Maldives and the recommendations to improve its relationship marketing strategies in future.The first part of this assignment will give an introduction of BML covering the nature of the company, vision, mission, core values, market size, market position, products and services, target market and the competitors.The second part will give an analysis of existing customer relationship strategies covering the good customer relationship strategies adopted and some challenges faced to build a good customer relation with its customers.The fourth part will talk about the recommendations to enhance and improve their existing customer relationship strategies and to overcome the challenges faced by them. Finally, a conclusion of this assignment will be given.
2.0 Introduction
Today’s business environment is very competitive compared to earlier. The customer expectation is increasing due to this high competition among the businesses. Most of the businesses are engaging in marketing activities but are fewer firms are concern with the relationship marketing. Most of the firms are trying to increase sales rather than building a good relation with their customer. Although this is the case, relationship marketing is crucial for all the businesses such as Bank of Maldives to retain the customers as well as to get more customers in future.
Customer relationship management is a broad strategy and process of acquiring, retaining and connecting with particular customer to create higher value for company and the customer (Parvatiyar and Sheth, 2001). According to Vavra (1992) relationship marketing is retaining the customers by using variety of after marketing strategies that lead to customer staying in touch after the sale are made.
Bank of Maldives was registered as a company on 23rd May 1982 and it was listed on 10th November 1982. After the registration they were given the license to provide banking services in Maldives. Bank of Maldives Plc. was inaugurated on 11th November 1982 and started business process as a joint venture bank with 60% of shares by the Government of the Maldives and 40% shares owned by IFIC Bank Ltd from Bangladesh. Maldives government decided to restructure the BML and purchased the 40% shares held by IFIC Bank Ltd. The Government decided to sell BML shares in December 1992 to the public in order to develop the Bank’s capital. Today, the BML has 26 branches in Maldives of which three are in Male and the rest are in different atolls (BML, 2010).
The banking industry in the Maldives includes seven banks which are 2 locally incorporated banks, 4 branches of foreign banks and a subsidiary of a foreign bank. The competitors for BML include Bank of Ceylon, State Bank of India, Mauritius Commercial Bank, HSBC, Habeeb Bank and Maldives Islamic bank. The balance sheet shows the assets value of the bank has been increasing over the past three years. It has liquid assets around 31% of its assets. It has around 40% of market share. As of Dec 31, 2010, tourism, construction and fishing industries accounted for 80% of the BML’s loan exposures with the share of tourism standing at around 60% (Credit Analysis & Research Limited, 2011). The net profit of the BML for 2012 has reached over MVR 200 million. Hence, BML has high market share and high market growth (“BML net profit”, 2012).
Currently, the BML is providing the services like various bank accounts, card services, transnational travel and payments, internet banking, bill pays, personal loans, prepaid recharge, mobile banking, ATM services, direct debit, business card solutions, loan and leasing and merchant service solutions. The target market is the whole population of Maldives including the foreigners in Maldives. The potential customers include businesses, the individuals in Maldives and Maldivians in international countries (students and businessmen who use bank facilities) (BML, 2010).
The vision is to lead the way through quality of service and dedication of their staff. The missions include becoming the leader in the financial industry in Maldives by spreading its presence in all key economic geographies in Maldives and promoting long term saving culture in the nation. The values are integrity, innovation, respect, communication and service (BML, 2010).
3.0 Analysis of existing customer relationship strategies
Bank of Maldives is concentrating on a new business model which is mainly focus on the creation of good customer relation. The following part will show how far the relationship models are adopted in BML.
3.1 Relationship model
The relationship model by Gummesson (1999) says that good relationships will leads to good external quality and good customer satisfaction. When there is good quality in internal relationships, the employee relationships will be improved. When the employee relation improves the external quality and customer satisfaction will be improved. As a result of this customers can be retained and profit of the firm will increase.
3.2 Existing good CRM strategies
1. Automatic Renewal of Debit Cards
BML is trying to improve customer satisfaction by introducing an automatic renewal process for American Express and Visa Debit Cards. The customers are no need to visit the card center to get a new debit card and the debit cards can be renewed before the expiry date of the cards. The purpose of this process is to help customers to get good banking services (BML, 2013).
2. Third-party Encashment
BML has decided to change the system for withdrawals maximum to RF 25000 and $1500. This change will help to avoid probable losses that may arise from third-party withdrawals from the customers’ accounts (BML, 2013).
3. Financial Awareness Program
BML has held different financial awareness programs between the youth. BML conducted this program in March 2013 at Ghiyaasuddin School to give information about banking and the banking products and services provided by BML. BML conducted an awareness program for general public about Islamic Banking and Finance which was aired by MBC in March 2013 and broadcasted by Voice of Maldives because they are going to introduce Islamic Banking soon (BML, 2013).
4. Human Resource Development
BML has different learning and development programs for their staff. In the beginning of 2013, they have started training sessions on basics of Islamic Banking, Microsoft excel training and professional English training. Besides, some employees were given the chances to join the external trainings such as Fraud and Forensic Accounting Training which were held in Maldives and in abroad (BML, 2013).
BML has performance management processes for the staffs at end of each year. They had 818 staff as at March 31st 2013 and they have recruited 20 staff in the first quarter of 2013. They also have manager’s refreshing Programs on human resource related issues (BML, 2013).
5. Redefining the Branch Concept
BML has introduced a new banking service for the customer in order to enhance the customers’ experience. BML Lite provides more customer friendly services which assists easy and quick access to the services. This is the first branch which provides banking services six days in a week. The customers can deposit Rufiyaa, US Dollar and cheques 24 hours a day through the deposit machines in this branch (BML, 2012).
6. Facilitating E-Banking
BML is trying to improve internet banking service. They internet banking transactions limits were increased and ATM withdrawal limits were also increased. BML introduced a free internet banking premium package on 1st January 2013 in order to improve customer experience (BML, 2012).
7. Integrating Customer Satisfaction with Performance Management
BML conducted 3 customer satisfaction surveys in 2012 in order to restructure BML towards a more customer oriented company. The research helped them to assess the customers’ satisfaction levels, identify the gaps in customer service and to measure the brand loyalty of the customers. After the surveys, all branches are focus on customer satisfaction. BML introduced service excellence awards to improve the service and to encourage competition between branches (BML, 2012).
8. Leveraging Social Media
In order to demonstrate its promises and to be transparent, they have introduced Facebook page and Twitter account. BML is using these channels to get customer feedback and as a customer service platform (BML, 2012).
9. Helping Community Growth
BML is focusing on CSR for their success. They distributing pension by their Dhoni Banking in order to provide access to their services to the whole population in Maldives. Their CSR activities in 2012 were mainly focused on community well-being, education of the students, developments of the Nation and youth. They have opened a computer lab in Addu City, Hithadhoo School in 2012. They have provided funds for local NGO computer laboratory in order to prevent the issues of abuse of illegal drugs in the country (BML, 2012).
BML is participating and funding to the social and community activities in the country. In 2012, they provided a HD projector and a project screen to Youth Centre in Male’. BML is one of the main sponsors of the Fisherman’s Day celebrations and for the 2012 National Quran Competition. BML is providing funds to Islamic Affairs for developing and maintaining of mosques in Maldives. They participated in Youth Challenge 2012 and sponsored recent Independence Day celebrations. They also have sponsored the local Twitter community’s futsal tournament (BML, 2012).
10. Serving the Unbanked Population
BML has expanded their services to inaccessible rural areas in the country by visiting these areas. In 2012, they have made over 2000 trips to provide their services and to provide pension allowances to the pension holders in various islands (BML, 2012).
11. Customized Financial Solutions for Corporate Customers
BML has supported the business community by offering a wide range of corporate and commercial banking products and services. They helped the resort sector by providing working capital and new development funding. They are supporting the construction industry by providing construction loans (BML, 2012).
12. Encouraging the Risk Management Culture
In 2012, BML developed complete Risk Management approach to their company. Besides Credit Risk Management, their Central Risk function helps for all the recovery works, operational risk, liquidity risk and regulatory compliance (BML, 2012).
13. They have long-term strategies
According to their vision statement, they are focusing mainly to provide quality service by empowering their staff. It also says that they always listen to their customer needs and are trying to increase customer confidence and satisfaction level. This is a very good strategy because the customer relationship must be always long-term to retain their customers in future (BML, 2012).
The strategies adopted by BML are related to the above relationship model. The human resource development strategy is linked to the very first stage of the model and the other strategies are linked to the customer satisfaction stage. Therefore, these strategies are linked with each other in as shown in the relationship model diagram. However, there are some challenges to their customer relationship management.
3.3 The Challenges
1. ATM Issues
The first issue with the ATMs is BML does not have enough ATMs in various parts of Maldives. Although they are having one branch in each atoll, they do have enough ATMs in these atolls. As a result of this many of its customers are unable to withdraw money in their atolls and they have to travel to another atoll or island to withdraw money. Male’ is the capital of Maldives and more than one third of the population is living in Male’ but BML is unable to provide good ATM service to the customers especially when the people get their salary. Customers have to spend more time in the queues to withdraw money. At the end of each month when the salary is deposited to the customers’ accounts, most of the ATMs are out of service due to high withdrawal (A. Hamza, Personal Interview, May 14, 2013).
The issues with the ATMs are sometimes customers do not get the cash or receipt after the accounts are being debited. The receipts after the transactions by ATM are very important for the customers because if the customers want to claim for compensation it will be very easy to trace the problem (A. Hamza, Personal Interview, May 14, 2013).
2. Bank queues issues
BML’s customers have long queues to buy dollar and for the other transactions. The customers are getting less token numbers for dollar purchase. The customers’ have to wait long time in to get service from the bank because more customers are getting their service from the BML. As a result of this many customers are dissatisfied with the BML’s service (“Merchants voice”, 2011).
3. Customer care issues
Sometimes the customers are unhappy about the customer service provided by BML. When a customer calls to report an issue, the customer does not get answers. Some customers complain that the staffs do not answer their queries even during the working hours (“BML to add”, 2012).
4. Customer secret information issues
There was news about the government raid into BML and took away some files of secret information about the customers. As a result of this some customers switched to other banks like HSBC, SBI, and Bank of Ceylon (“No Confidence”, 2011). There was also a news about the BML will be giving some details about customers banking history and other information to third parties. As a result of this the confidence on BML has decreased (“How Safe”, 2011).
5. Fraud Issues
There are fraud cases by BML’s employees from customers’ bank accounts in the recent years. It has been reported that an employee works in the BML’s Gaafu Dhaalu atoll Villingili branch has been suspended for an unauthorized transfer of MRF 2000 from a customer's account to another account. This has lost some customers trust on BML (“BML suspends”, 2011).
6. Online Security issues
Recently BML has advised its customers not to send their personal details like bank card numbers, account numbers through emails after giving a warning about the fake e-mails being sent in the BML’s name (“BML issues”, 2013).
4.0 Recommendations to improve customer relationship strategies
Although, BML has some challenges to their customer relationship management, they can overcome these challenges and can improve the existing customer relationship strategies by adopting the following recommended strategies.
4.1 Improve ATMs
ATMs are very essential for BML to build a good relation with its customer. BML has to improve their ATMs by increasing their branch networks and installing ATMs in strategic locations where more people can reach. They need to install more ATM’s in locations where existing ATM’s are located in order to cater the high demand during the end of each month (Pokharel, 2011).
It is also important to place instructions near ATMs to explain the use and a demo by showing which transactions can be done by ATMs and the ATM transactions procedures. Hence the customers will feel more confident when they use ATM’s. It is also very important provide an easy way to get compensation for the customers who do not get cash due to possible errors in ATM transactions (Pokharel, 2011).
4.2 Use a Queue Management system
It is recommended to use a queue management system in BML. This system is powered by the cell phones. This will help to manage several waiting lines at the same time and can interact with customers by text notices or a digital display. The patient, student and customer are free from standing in lines. They can roam without the anxiety of losing their place in lines. So, BML will be able to get a solution for the queue issues in their company (Nexa Group Pty Ltd, 2013).
4.3 Online security management
It is important to have an effective security management which will help in layering the number of solution that focus on people, processes, technologies and risks. When all these layers are combined, it will create a great tool that can help BML a successful way to overcome its security challenges than a single individual solution. BML always need to aware and engage the customers about the online security (Ashfield & Shroyer, 2009).
4.4 Customer care management
BML need to handle the customers’ complaints in a systematic way. BML need to train the employees to handle dissatisfied customers. They need to employ efficient employees in their call center with required facilities. BML also need to maintain the customers’ personal information confidential in order to avoid losing of their customers (Pokharel, 2011).
4.5 Select the honest and qualified employees
It is very important to hire honest employees for the job because Banks are the organizations which have to safeguard customers’ money. This can be done by recruiting the qualified employee who does not have past fraud records. They should have good interviews to select the right employee for the job. In addition to this, they need to give proper training to the employees and they need to compensate the customers who might lose the money by a dishonest employee (Pokharel, 2011).
4.6 Increase Switching Cost
BML should have strategies which will increase the switching costs of its customers in order to retain their customers and to increase the customers share. The switching cost can be increased by providing excellent services, good customer service, focus on differentiation strategies, having emotional links with customers and making they feel as a valued customer (Pokharel, 2011).
4.7 Build Brand Image
BML need to have extroverted culture to promote its brand name. This change should be followed in all the levels of the company. Employees are the most important people to build a strong brand. BML needs to prepare its employees with the required approaches and skills hence the employees will play as an ambassador role in promoting their brand name (Pokharel, 2011).
5.0 Conclusion
Bank of Maldives is a successful company in banking industry in Maldives. Although there are many competitors in the market, they are covering a high market share. They have their branches throughout the country. They are providing variety of products and services to their target markets.
The analysis of their existing customer relationship strategies shows that they are having various good relationship strategies like focusing on customer retention, orientation of product benefits, long-term concentration, high customer service, high customer commitment and high quality services. These strategies include easy ways to renew the debit cards, third party enhancement, participating in different occasions, providing awareness programs, developing their human capital, redefining branch concept, facilitating e-banking, integrating customer Satisfaction with performance management, having different social media, helping the community growth, assisting various sectors developments, serving the unbanked population , and other countries for the development of the country.
However, there are some challenges to their customer relationship management like issues with ATM’s, their customer queue issues, customer care issues, issues with the maintaining of customers’ confidential information, employee fraud issue and online security issues.
Although, BML has some challenges to their customer relationship management, they can overcome these challenges and can improve the existing customer relationship strategies by improving their ATM services, adopting the cell phone queue management system, strengthening the online security system, providing quality customer care service, selecting the honest employees, increasing the customer switching cost and building a strong brand image of the company.
As a Marketing Manager’s opinion, BML can enhance their existing customer relationship strategies by adopting the recommended strategies to retain its customers and to get more market share in future.
6.0 Reference
Ashfield, J., M. & Shroyer, D. (2009). Security Management: An Ongoing Challenge for Banks. Retrieved May 15, 2013, from http://www.banktech.com/risk-management/security-management-an-ongoing-challenge/214303644
Bank of Maldives issues email scam warning to customers. (2013, April 29). Minivan News. Retrieved May 15, 2013, from http://minivannews.com/news-in-brief/bank-of-maldives-issues-email-scam-warning-to-customers-57147
Bank of Maldives net profit for 2012 rises to MVR 200 million. (2012, October 31). Minivan News. Retrieved May 11, 2013, from http://minivannews.com/news-in-brief/bank-of-maldives-net-profit-for-2012-rises-to-mvr-200-million-46488
Bank of Maldives to add 19 new ATMs. (2012, November 03). Minivan News. Retrieved May 14, 2013, from http://minivannews.com/news-in-brief/bank-of-maldives-to-add-19-new-atms-46631
Bank of Maldives. (2012). 2012 Annual Report. Retrieved May 12, 2013, from http://www.bankofmaldives.com.mv/SiteCollectionDocuments/BML%20-%20Annual%20Report%202012%20-%20English%20-%2009%20May%202013%20%28small%20file%29.pdf
Bank of Maldives. (2013). First Quarter Report, January to March 2013. Retrieved May 12, 2013, from http://www.bankofmaldives.com.mv/SiteCollectionDocuments/1st%20Quater%20Report%202013.pdf
BML suspends employee over Rf2,000 fraud. (2011, August 23). Haveeru online. Retrieved May 15, 2013, from http://www.haveeru.com.mv/fraud/37287
Bank of Maldives. (2010). Company Background. Retrieved May 11, 2013, from http://www.bankofmaldives.com.mv/INVESTORRELATIONS/CB/Pages/default.aspx
Credit Analysis & Research Limited. (2011). Report on Bank of Maldives. Retrieved May 11, 2013, from http://www.careratingsmaldives.com/Files/Bank_of_Maldives_writeup_Final.pdf
How safe is your account in Bank of Maldives. (2011, April 07). Maldives Today Time press. Retrieved May 14, 2013, from http://www.maldivestoday.com/2011/04/07/how-safe-is-your-account-in-bank-of-maldives/
Merchants voice concerns over police operation against dollar black market. (2011, March 29). Haveeru online. Retrieved May 14, 2013, from http://www.haveeru.com.mv/english/details/35066
Bank of Maldives. (2010). Our Commitments. Retrieved May 11, 2013, from http://www.bankofmaldives.com.mv/InvestorRelations/Pages/OurCommitments.aspx
Bank of Maldives. (2010). Personal banking and business banking. Retrieved May 11, 2013, from http://www.bankofmaldives.com.mv/PBanking/Pages/default.aspx and http://www.bankofmaldives.com.mv/BBanking/Pages/default.aspx
Gummesson, E. (1999). Total Relationship Marketing: Rethinking Marketing Management from 4Ps to 30Rs. Oxford: Butterworth Heinemann.
Nexa Group Pty Limited. (2013). Queue Management. Retrieved May 15, 2013, from http://www.nexa.com.au/queue-management/
No Confidence of Banks. (2011, April 10). Maldives Today Time press. Retrieved May 14, 2013, from http://www.maldivestoday.com/2011/04/10/idiots-guide-to-dollar-shortage-in-maldives/
Parvatiyar, Atul and Jagdish N. Sheth (2001), Customer Relationship Management: Emerging Practise, Process, and Displine. Journal of Economic and Social Research, 3(2), 1-34.
Pokharel, B. (2011). Customer Relationship Management: Related Theories, Challenges and Application in Banking Sector. Banking Journal, 1(1). Retrieved May 15, 2013, from http://www.google.mv/url?sa=t&rct=j&q=Customer+Relationship+Management:+Related+Theories%2C+Challenges+and+Application+in+Banking+Sector&source=web&cd=1&cad=rja&ved=0CC0QFjAA&url=http%3A%2F%2Fwww.nepjol.info%2Findex.php%2FBJ%2Farticle%2Fdownload%2F5140%2F4272&ei=zbWXUbHXG8KJrQfLrYCwDA&usg=AFQjCNGw7SpwhDqyaUCLYEQ6NlSS4AoCyw&bvm=bv.46751780,d.bmk
Vavra, Terry G. (1992), After marketing: How to keep customer for life through relationship marketing. Homewood Ill.: Business One Irwin.
Module Name: Marketing Management & Strategy
OPEN UNIVERSITY MALAYSIA
FACULTY OF BUSINESS MANAGEMENT
BBSG 4103
MARKETING MANAGEMENT AND STRATEGY
Name: Adam Khaleel
Lecturer: Aminath Laila
Learning Centre: Villa College
Trimester: May 2013
Contents
1.0 Executive Summary
This assignment mainly will talk about the situation analysis, SWOT analysis and existing segmentations strategies of Bank of Maldives. In addition to this a brief introduction and the recommended segmentation strategy will be covered to increase market share for the BML.
The first part of this assignment will give comprehensive introduction covering BML’s background, market size, market position, products and services, the purpose and scope of the assignment. In addition to this the vision, missions, core values and the proposed service to introduce will be discussed.
The second parts of the assignment will give all elements of situation analysis of BML. This part will include internal environment analysis, customer environment analysis, external environment analysis, competitor analysis, BCG matrix and the porter’s five forces.
The third part of the assignment will give a detailed SWOT analysis of BML including some examples. The fourth part of the assignment will evaluate the appropriateness of the existing segmentation strategies of BML by providing relevant examples.
The fifth part of the assignment will talk about a recommended segmentation strategy which is Islamic banking segmentation with justifications. Lastly the all of the key points of this assignment will be summarized.
2.0 Introduction
Market research and marketing plan is very important for every business organization before introducing a segment or a product because it will help to identify the current situation of the business in terms of internal environment, customers’ environment, competitor environment, external environment, strengths, weakness, opportunities and threats.
Bank of Maldives was registered on 23rd May 1982 and it was listed on 10th November 1982. After this registration they were provided the license to provide banking services in Maldives. BML was inaugurated on 11th November 1982 and started its business process as a joint venture bank with 60% of shares by the Maldives government and 40% shares by IFIC Bank Ltd from Bangladesh. After few years, Maldives government restructured the BML by purchasing the 40% shares held by IFIC Bank Ltd and sold BML shares in December 1992 to the public in order to develop the Bank’s capital. Today, the BML has 26 branches in Maldives of which three are in Male and the rest are in different atolls (BML, 2010).
The banking industry in the Maldives includes seven banks which are two locally incorporated banks, four branches of foreign banks, and a subsidiary of a foreign bank. BML is in this banking industry in Maldives. The Balance Sheet size of the bank has been over the past three years. It has liquid assets around 31% of its assets. It has around 40% of market share. As of Dec 31, 2010, tourism, construction and fishing industries accounted for 80% of the bank’s loan exposures with the share of tourism standing at around 60% (Credit Analysis & Research Limited, n.d.). The net profit of the Bank of Maldives Plc. Ltd (BML) for 2012 has reached over MVR 200 million. BML’s market growth and market share are high compared to other competitors (“BML net profit”, 2012).
Currently, the BML is providing various products like ATM services, bank accounts, direct debit, card services, internet banking, bill pays, personal loans, prepaid recharge, mobile banking, business card solutions, transnational travel and payments, loan and leasing and merchant service solutions (BML, 2010).
Its vision is to provide quality of service by dedicating its staffs. The missions include becoming the leader in Maldives financial industry by providing its products in various atolls in Maldives and encouraging long term saving culture in the Maldives. Its values include integrity, innovation, respect, communication and service (BML, 2010).
3.0 Situation analysis
3.1 Internal environment
Retail banking is the main business of BML. Most of the developments banking activities in all the atolls of the Nation are also handling by BML. BML also covers a variety of modern banking services through online in a fully computerized environment and they are proud to serve the nation as the leading bank in the Maldives. The marketing objectives and strategies are to lead the way by providing quality services by dedicating their staffs’. This will benefit their stakeholders because customers will receive high quality product and services, shareholders will receive high dividends and employee will receive good wages. The current marketing performance is good because the number of customers and profits are increasing continuously (UKEssays.com, n.d.).
Currently, BML has enough resources like finance, qualified and experienced human resources in order to achieve their future marketing objectives and the overall objectives. Meantime, it is expected to increase their resources in future. There are no current and anticipated cultural and structural issues in BML because there is separate marketing department in the company and resources are allocated to this department. The marketing function is divided into the customer experience, public relations, brand communications and corporate social responsibilities as well as research and planning (Bank of Maldives, 2013).
3.2 BCG matrix
The above BCG matrix shows the individual services like online banking and mobile banking are in question mark but the prepaid recharge service is in dog quadrant. The ATM services and different loan schemes are in star quadrant while the bank accounts and bill pays are in cash cow quadrant. Also, when analyzing the whole bank of Maldives in BCG matrix, it is clear that it is in star stage because it has high market share and high market growth. So it is evident that BML has the potential with essential huge investment to grow market share at the expenditure of more strong competitors (UKEssays.com, n.d.).
3.3 Customer environment
For the analysis of the customer environment, 5W model is used. It will identify who are the customers, why they buy, what they do, when they buy and where they buy the products of BML.
Why? The BML’s current customers are all Maldivians including foreigners who are living in Maldives and the Maldivians who live in international countries (students and businessmen who use bank facilities). The potential customers are the customers who have different bank accounts in BML including various age groups. What? Most of them deposit their salary to BML’s account. The customers mainly save their money in BML and some customers are enjoying with BML’s different loan. These loans are used for working capital purposes and expansion purposes. Why? The customers take these loans to overcome their financial difficulties and for building houses. The customers borrow these loans because the loans can be easily obtained in a short period of time. Some customers do not use these short term loans because of high interest and they prefer the Islamic banking system. Where? The customers are able to get BML’s product in various atolls in Maldives. The customers also can make online transactions when without visiting the BML’s branches. When? The customers mainly use the BML’s loans to overcome the financial difficulties they face. The customers also use the international payment methods like travellers’ cheque while they are travelling abroad (UKEssays.com, n.d.).
3.4 Competitor and Customer analysis (Porters Fives Forces)
Threat of new entrants: BML is a local bank in Maldives. However, there are other banks in Maldives like State bank of India, Habib Bank, HSBC bank in Maldives, Maldives Islamic Bank but they do not have more than one branch in Maldives. Therefore, it is very challenging for new entrants to come in this banking industry because the threat of new entrants mainly depends on the barriers to entry. In order to enter into the banking industry in Maldives for local businesses, it is very difficult due to high capital requirement they need to invest on the business and also it is challenging to achieve the economies of scale. Similarly Bank of Maldives is one of the main suppliers with 26 branches across the country (UKEssays.com, n.d.).
Threat of substitutes: The threat of substitute services depends on the buyers' willingness to substitute, the relative price, performance of substitutes and the costs of switching to substitutes. The threat of substitute services of BML is comparatively high because there are many substitute services provided by other competitors (UKEssays.com, n.d.).
Bargaining power of suppliers: For BML, bargaining power of suppliers is less because there are more leading supplier like rainbow, all other brothers business in the market. Bargaining power of buyers: For BML, the bargaining power of buyers are less because BML is the only business that provides the customers throughout the country and they have branches in many atolls of the country and when looking to other competitors such as HSBC, they are the only branch situated in capital of Maldives. Intensity of rivalry: BML is the leading company of banking industry in Maldives. Also, for BML the degree of differentiation is higher than the other competitors in Maldives (UKEssays.com, n.d.).
3.5 PESTEL Analysis (External environment)
Political
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Social
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1. Maldives has a parliamentary style of government
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1. Maldives is an Islamic nation
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2. President is elected in every five years
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2. Maldivians are socially connected
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3. President is both chief of state and head of government
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3. High percentage of women are in the workforce
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4. More Political Parties have emerged
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4. High living standard
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Economical
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Technological
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1. Maldives has a mixed economy
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1. Telephone service has improved
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2. Real GDP growth is decreasing
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2. Internet service is available to all the inhabited islands
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3. The inflation and interest rate are increasing
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3. Most of the people are having mobile phones
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4. The US dollar value has increased
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4. Linked to international fiber optical cable
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Environmental
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Legal
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1. The climate change and sea level rise are some environmental issues
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1. The employees have to pay 7% of the basic salary to retirement pension plan
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2. Waste management is a one major challenge
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2. Businesses have to pay business profit tax
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3. Maldives have two monsoons
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3. Islamic religious legal system with English common law
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4. Fish and natural beauty are two major resources
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4. There are 7 provinces and 1 municipality
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(UKEssays.com, n.d.).
4.0 SWOT analysis
The SWOT analysis includes the internal and external environments analysis of the company. Internal framework includes the strengths and weaknesses on main factors such as financial performance and resources, production facilities and capacity, market share, product quality, customer perceptions, product availability, human resources and organizational communication. On the other hand, external environment includes the information on the market such as customers, competition, economy, social trends, government regulations and technology (Bojei & Wel, 2010, p.34).
Bank of Maldives SWOT analysis
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Strengths
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Weaknesses
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1. They are financially stable, their bank is well capitalized, they have high market share and they can get government assistance.
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1. There is less number of staffs to deal with their daily transactions and customers problems.
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2. They have more effective recruitment and selection process.
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2. They have limited US dollars to provide their customers.
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3. They are awarded for 3 years about their customer satisfaction methods.
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3. They have difficulty to get loans compare to their competitors.
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4. They have easy transactions for its clients.
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Threats
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5. They have latest technology as leader in electronic banking.
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1. Recently they have stopped providing some cards to the customers.
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6. They are the most trusted company with the highest transactions in Maldives.
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2. The economic crises had bad impact on the business.
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7. They have 27 years banking service in this market and are well branded.
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3. There are more competitors such as state bank of India and Maldives Islamic bank.
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Opportunities
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1. Since they have good financial stability, they can develop their business in other islands.
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2. They can sell additional shares to the public to gain more customers and to have an enough capital to provide more services.
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3. They can deal with their daily transactions and to get experience from developed banks like Swiss bank and they may ask from the Maldives government talk about it with them.
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(UKEssays.com, n.d.).
From above SWOT analysis, it is understood that BML have more strengths and opportunities than weaknesses and threats. Therefore, BML can overcome these weaknesses and threats by using their strengths and opportunities to achieve the marketing and overall objectives of the company.
5.0 Evaluation of existing segmentation strategies
5.1 Geographical segmentation
BML has 26 branches throughout Maldives. They are Eydhafushi branch, Dhidhdhoo branch, Bazar branch, Fuvahmulaku branch, Funadhoo branch, Fonadhoo branch, Hulhumeedhoo branch, Hithadhoo branch, Gan branch, Kulhudhuffushi branch, Kudahuvadhoo branch, Hulhumale’ branch, Majeedheemagu branch, Main branch, Mahibadhoo branch, Muli branch, Manadhoo branch, Male’ international airport branch, Thinadhoo branch, Rasdhoo branch, Naifaru branch, Villimale’ branch, Veymandoo branch, Ungoofaaru branch, Villingili branch and BML lite. They are providing the services in all the atolls (BML, 2010).
5.2 Business segmentation (Industry/Firmographic)
This type of segmentation will focus on businesses (CEB Sales & Service. (2012). BML is helping the businesses with a wide range of financial products and services by catering for the needs of small, medium and large businesses. The business segmentation includes all the industries in Maldives such as fishing and agriculture. They offer a variety of business solutions for managing the accounts, cards, loans, merchant services and international transactions. In addition to providing of different bank accounts, they provide business debit card, corporate card and internet banking. The international payments include expatriate special transfer, overseas payments and receivables, travellers’ cheques and foreign currency, international multi-currency cheque clearing, trade services and correspondent banking (BML, 2010).
5.3 Retail banking segmentation
Retail Banking focuses on sales and service for retail customers and developing a differentiated customer service. This involves managing Micro, Small and Medium Enterprise Banking, organizing and managing activities related to management of Banks affluent market segment and managing branches (BML, 2013).
Retail banking is the main business of BML. Most of the developments banking activities in all the atolls of the Nation are also handling by BML. BML also covers a variety of modern banking services through online in a fully computerized environment and they are proud to serve the nation as the leading bank in the Maldives. Retail banking Services include loans & advances, travelers’ cheques, international money transfer, trade services, debit & credit cards, merchant services, internet banking, direct debit and salary handling. Today, BML has 26 branches throughout the nation (Bank of Maldives Plc., n.d.).
5.4 Corporate banking segmentation
This is a kind of demographic income group segmentation (Kotler and Keller, 2009: 258). Corporate Banking is divided into two areas which are relationship management and transaction banking. It is aimed at building strong, enduring relationships with corporate clients and offering them one stop solutions to meet their banking needs. Corporate banking facilities include loans and leasing, working capital facilities, investment financing, credit card lines, electronic banking and foreign trade services (BML, 2013).
5.5 Electronic banking segmentation
This is a type of psychographic lifestyle segmentation. BML’s internet banking helps the customers to do online banking. It is flexible and free to bank securely when the customers in their homes or offices. They help customers for the different internet banking requirements by reflecting their plans of internet banking for individuals and business’s needs. The customers can choose the standard plan or the premium plan which is best suited for their needs. The internet banking includes mobile banking, bill pay, online banking, ATM services (BML, 2010).
5.6 Development banking segmentation
Development banking helps to reduce the income disparity between the Male’ and rest of the country by increasing the employment opportunities, income level of outer atoll population. The Bank continued to be actively engaged in financing Small and Medium Enterprises in fisheries, agriculture and commerce sectors. These loans significantly contribute to improving the livelihood of rural communities, alleviating poverty and creating employment opportunities. Our reach extends to all economic sectors both in the public and private sectors and to customers from largest of corporate entities to individual borrowers (BML, 2010).
6.0 Recommendation of segmentation strategy
The introduction of Islamic banking as religion segmentation is a kind of product development for BML because they are introducing this service to the existing market as a new service (Bojei & Wel, 2010, p.60). The below perceptual map’s Y axis represents price of Islamic banking services and the X axis represents the quality of these services. It shows that currently Maldives Islamic Bank (MIB) is positioned on high price and high quality quadrant. The price is high compared to the quality of these services provided by them. This might happen due to not having same type of competitors in terms of Islamic banking in Maldives. Therefore the customers might not get quality
services at low prices.
services at low prices.
The Islamic banking service which is going to be provided by BML can be in high price and high quality quadrant but the price of this service will be lower and the quality of the service provided will be high compared to MIB.
Therefore, I am recommending a new segmentation for Bank of Maldives (BML) to introduce its customers which is Islamic banking as religion segmentation. “The demographic segmentation divides customers into segments based on demographic values such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, social class and nationality” (Armstrong and Kotler, 2005). Therefore, Islamic banking will be a demographic segmentation because it focuses on the religious factor. The reasons why I have selected Islamic banking as religion segmentation for BML are as follows.
Less Competition; Currently, MIB is the only bank which providing Islamic banking services in Maldives. Recently, Maldives Monetary Authority (MMA) has officially granted the license to Bank of Maldives to operate Islamic Banking in Maldives. Bank of Maldives has been working for many days to offer Islamic Banking services to its customers. On receiving the license, necessary works are being carried out so that Islamic Banking services are availed to customers at earliest (BML, 2013). Since, MIB is the only competitor for BML in providing Islamic banking services; it will be easier for the BML to get into the market because of less competition.
More branches throughout the country; BML has 26 branches providing services to customers in all the atolls in Maldives (BML, 2010). The market share is about 40% and they are closer to customers (Credit Analysis & Research Limited, n.d.). This will help BML to introduce Islamic banking in Maldives easily. However, MIB does not have branches in various atolls. This is a competitive advantage for BML over others especially MIB. Therefore, BML can introduce this segmentation successfully throughout the country.
Maldives is an Islamic Nation; Since Maldives is an Islamic nation, many customers need Islamic banking services in order to follow Islamic rules (Nazeer, 2010). Therefore, BML should introduce this segmentation in Maldives in order to satisfy and retain their customers in future. If they take more days to introduce this service, MIB might steal the some BML customers in future. Hence, this segmentation is very essential for BML in order to sustain their market share in future.
Existing resources; BML has high profit, more assets, good human resources, experiences and high good will (“BML net profit”, 2012). Therefore, BML can introduce this segment more efficiently than MIB by using their existing resources. For instance, BML can provide some of these services at low prices or at a high quality which is convenient for customers.
To have competitive advantage; after introducing this segmentation into the market, this will be a competitive advantage for BML and MIB over other five competitors in the market. Therefore, the BML can steal some customers from these competitors in future. (Maine, 2009).
There are several advantages of introducing this segment in Maldives to the BML and its customers. Through segmentation, BML can match customers’ needs and wants. Since customers have different needs and wants, they must be handled in different ways. This segmentation will help them to identify the different customer segments and their preferences. BML needs to identify solutions to each segment separately because the customers have different needs and wants in each segment. Through segmentation, BML can increase their market share, profit and will be able to expand their company in future (Maine, 2009).
7.0 Summary
Bank of Maldives is a successful company in Maldives banking industry covering a large area of the market. They are providing various services to its customers and are leading the market. The situation analysis of BML shows that the internal environment of BML is in a good situation because the marketing objectives and strategies are aligned with their vision and mission. The customer environment shows that the customers are happy about their services but due to the high competition in the market the customers are seeking for the new services like Islamic banking. The external environment analysis shows that they are facing more political, economic, social and technological challenges. The competitor environment is challenging because of the high competition in market.
The SWOT analysis shows that BML has many strengths and opportunities than the weaknesses and threats. Therefore, they can overcome these weaknesses and threats by taking the advantages of their strengths and opportunities in order to achieve their marketing and overall goals.
The evaluation of the existing segmentation strategies of BML, six main segmentation has been identified which are geographical segmentation, business segmentation, retail banking segmentation, corporate banking segmentation, electronic banking segmentation and development banking segmentation. These segmentations are appropriate and successful because they are providing various services which are useful for the customers in each of the segmentations.
Although the existing segmentations are appropriate and successful, it is recommended to have an Islamic banking as a segmentation in order to satisfy the existing customers and to get more customers in future. This segmentation is also very appropriate and will be successful to implement because Maldives is an Islamic nation, there is one competitor in providing this service, BML has more branches and resources and BML will be able to take competitive advantage in future. Therefore, BML should introduce the Islamic banking segmentation as soon as possible in order to retain their customers and to get more customers in future.
8.0 References
Bank of Maldives. (2013). Request for proposal 2013: Leadership development program. Retrieved May 11, 2013, from http://www.bankofmaldives.com.mv/SiteCollectionDocuments/Leadership%20Development%20RFP%20FINAL%20linkedin.pdf
Bank of Maldives. (2013). BML receives Islamic Banking license [Press release]. Retrieved May 12, 2013, from http://www.bankofmaldives.com.mv/SiteCollectionDocuments/09PR%20Islamic%20Banking%20License-eng.pdf
Bank of Maldives. (2010). 2010 Bank of Maldives annual report. Retrieved May 12, 2013, from http://www.bankofmaldives.com.mv/SiteCollectionDocuments/Annual%20Report%202010%20-%20English.pdf
Bank of Maldives. (2010). Business Banking. Retrieved May 12, 2013, from http://www.bankofmaldives.com.mv/BBanking/Pages/default.aspx
Bank of Maldives. (2010). Company Background. Retrieved May 11, 2013, from http://www.bankofmaldives.com.mv/INVESTORRELATIONS/CB/Pages/default.aspx
Bank of Maldives. (2010). Contact us. Retrieved May 12, 2013, from http://www.bankofmaldives.com.mv/Information/Pages/ContactUs.aspx
Bank of Maldives. (2010). Maldives internet banking. Retrieved May 12, 2013, from http://www.bankofmaldives.com.mv/PBanking/MIB/Pages/default.aspx
Bank of Maldives. (2010). Our Commitments. Retrieved May 11, 2013, from http://www.bankofmaldives.com.mv/InvestorRelations/Pages/OurCommitments.aspx
Bank of Maldives. (2010). Personal banking and business banking. Retrieved May 11, 2013, from http://www.bankofmaldives.com.mv/PBanking/Pages/default.aspx and http://www.bankofmaldives.com.mv/BBanking/Pages/default.aspx
Bank of Maldives net profit for 2012 rises to MVR 200 million. (2012, October 31). Minivan News. Retrieved May 11, 2013, from http://minivannews.com/news-in-brief/bank-of-maldives-net-profit-for-2012-rises-to-mvr-200-million-46488
Bank of Maldives Plc. (n.d.). Business.com.mv. Retrieved May 12, 2013, from http://www.google.mv/url?sa=t&rct=j&q=bank+of+maldives+retail+banking&source=web&cd=5&cad=rja&ved=0CFAQFjAE&url=http%3A%2F%2Fwww.business.com.mv%2Fdirectory%2Flisting.php%3Fid%3D8%26action%3Dpdf&ei=zjGPUfLFM8iLrQewkICwCQ&usg=AFQjCNGmvih26PXsDvnRYVrEzmP3EsiDnA&bvm=bv.46340616,d.bmk
Bojei, J., & Wel, C., A., C. (2010). Marketing Management and Strategy. Malaysia: Meteor Doc. Sdn. Bhd.
CEB Sales & Service. (2012). The 3 Most Widely Used B2B Segmentation Methods. Retrieved May 13, 2013, from http://www.executiveboard.com/sales-blog/2012/02/
Credit Analysis & Research Limited. (n.d.). Report on Bank of Maldives. Retrieved May 11, 2013, http://www.careratingsmaldives.com/Files/Bank_of_Maldives_writeup_Final.pdf
Kotler, P., R., & Keller, K., L. (2009). Marketing Management. United States: Prentice Hall.
Maine, J. (2009). Top 5 reasons to segment. Retrieved May 12, 2013, from http://sparxoo.com/2009/05/25/top-5-reasons-to-segment/
Nazeer, A. (2010, September 1). Maldives a 99.41 percent Muslim country, claims RISSC report. Minivan News. Retrieved May 12, 2013, from http://minivannews.com/society/maldives-a-99-41-percent-muslim-country-claims-rissc-report-10838
UKEssays.com. (n.d.). Overview of the Bank of Maldives. Retrieved May 11, 2013, from http://www.ukessays.com/essays/business/overview-of-the-bank-of-maldives-business-essay.php
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