JUNE 2019 P1
The marketing mix is one of the major concepts in modern marketing. It may be defined as the
set of controllable marketing variables that the firm blends to produce the responses it wants in
the target market. It consists of everything the firm can do to influence the demand for its
products.
According to Jerome McCarthy, marketing mix refers to the 4 P’s: product, price, place and
promotion. A combination of these four elements represents the marketing mix of a business.
The impact is significant on the marketing mix of a bank which decides to make use of internet
to provide its services. Firstly, let us discuss the first element of the marketing mix which is
product.
Product / Customer – moving it services online will radically alter the customer solution. This
means that customers can have instant access to their bank accounts to view the balance.
Customers will be able to make payments, apply for loans overdrafts and mortgages. For
example, with the help of MCB juice application, we can pay our monthly bills easily using a
smartphone. Moreover, it also allows banks to offer a large range of bank accounts - and much
easier switching between these accounts or set up the accounts.
Price / cost – There is a potential reduction in location costs – although setting up an online
system of banking will require a large start up cost and maintaining the network will need a
large increase in the IT budget, this will be hugely offset by the reduction in costs by
automation. Furthermore, staff in a previously labour intensive service are a huge cost which
can be massively reduced by moving online. However, with banking now available online it
means the barriers to entry of needing physical premises have been taken away.
Place / Convenience – moving online gives customers the opportunity to manage your account
wherever they are – on laptop – tablet – phone. Instead of having to go to a bank they can do
their banking virtually. This is much more convenient for the majority of customers as they
don’t have to travel to banks physically and means customers can have access to bank services
24/7. However, this may mean that they have to close their high street banks as less customers
are using them. Traditional bank staff may lose jobs. This may make it less convenient for
elderly customers or less tech savvy customers who find it difficult to shift online after years
of banking.
Promotion / Communication – A significant change here, as the bank will have the opportunity
to sell many more bank-related services such as insurance or a larger range of bank accounts.
Moving communication online allow banks to use the data of customers to target their
promotion much more accurately and effectively. For example, they could target car loans at
younger customers with a high income but low savings. Investment accounts to customers with
high savings. They can also use email, social media like Instagram, Facebook or their own app
to target different customers and try and gain new customers.
Overall, the marketing mix will be affected mostly by place and promotion. Place because
moving online will mean that for most customers most of their transactions and banking
business will now be done online rather than going into a physical bank. This presents
opportunities in terms of cost reduction but also a greater threat from competitors. It is also
now much easier for customers to move to online banks who don’t need to have a physical
presence near to their customers. The bank needs to put huge effort to make sure that the new
“place/convenience to customer” is easy to use, but also secure so customers feel their money
is safe. They also need to make sure if there is a problem, they can get the problem solved
quickly and they still feel like a valued customer when the customer service management at
the physcial bank is no longer there.
This means promotion/communication with customer is critical if the bank it to take advantage
of the opportunities afforded by moving online. The bank can retain its existing customers and
add value through additional services if it communicates effectively and maintains a positive
relationship through the transition. It will have to radically change its promotion strategy to
keep their services relevant and competitive against the new entrants to the market and existing
banks.
In reality although place/promotion will be most impacted - all of the marketing mix will be
hugely changed by moving online. It is probably the biggest innovation in banking since people
first started using banks, so getting the right balance in the marketing mix between all the
different elements will be crucial to capitalizing on the opportunity.