Wednesday, December 23, 2015

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
Social
1. Maldives has a parliamentary style of government
1. Maldives is an Islamic nation
2. President is elected in every five years
2. Maldivians are socially connected
3. President is both chief of state and head of government
3. High percentage of women are in the workforce
4. More Political Parties have emerged
4. High living standard
Economical
Technological
1. Maldives has a mixed economy
1. Telephone service has improved
2. Real GDP growth is decreasing
2. Internet service is available to all the inhabited islands
3. The inflation and interest rate are increasing
3. Most of the people are having mobile phones
4. The US dollar value has increased
4. Linked to international fiber optical cable
Environmental
Legal
1. The climate change and sea level rise are some environmental issues
1. The employees have to pay 7% of the basic salary to retirement pension plan
2. Waste management is a one major challenge
2. Businesses have to pay business profit tax
3. Maldives have two monsoons
3. Islamic religious legal system with English common law
4. Fish and natural beauty are two major resources
4. There are 7 provinces and 1 municipality

(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
Strengths
Weaknesses
1. They are financially stable, their bank is well capitalized, they have high market share and they can get government assistance.
1. There is less number of staffs to deal with their daily transactions and customers problems.
2. They have more effective recruitment and selection process.
2. They have limited US dollars to provide their customers.
3. They are awarded for 3 years about their customer satisfaction methods.
3. They have difficulty to get loans compare to their competitors.
4. They have easy transactions for its clients.
Threats
5. They have latest technology as leader in electronic banking.
1. Recently they have stopped providing some cards to the customers.
6. They are the most trusted company with the highest transactions in Maldives.
2. The economic crises had bad impact on the business.
7. They have 27 years banking service in this market and are well branded.
3. There are more competitors such as state bank of India and Maldives Islamic bank.
Opportunities
1. Since they have good financial stability, they can develop their business in other islands.
2. They can sell additional shares to the public to gain more customers and to have an enough capital to provide more services.
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.
(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.
 
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
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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