Table of Contents
- What have been key success factors for HSBC?
- Where is HSBC vulnerable and what should they watch for?
- Author’s recommendations to Senior Marketing Executives of HSBC
- Discussion Points
- Reference List
The author provides a marketing spotlight on HSBC in this short essay, in the form of answers to the questions raised in the exercise. Post replying to the queries, the author presents some discussion points concerning the global branding & marketing strategy of HSBC.
What have been Key Success Factors for HSBC?
HSBC’s primary success factor has been its emphasis on locating the HSBC brand in the region of operation, making it easier for customers to deal with them. Their localization strategy has helped them build local competitive advantages in their operating regions, so that they can compete effectively with the region’s local players. A more in-depth insight into this strategy shows that the efforts are geared towards being the consumer’s expert on the nation’s cultural awareness and thus gaining profound financial visibility opportunities in the country hidden in the personality & motivation of the end consumers that is normally invisible to other outsiders (Montgomery. 2008).
The localization model of HSBC is supported strongly by their global technology system called Hexagon Infrastructure having foundations laid way back in 1983 and subsequently key enhancements implemented in 1987, 1989, and 1994 (Peffers and Tuunainen. 1999). HSBC operates one of the world’s most complex and effective banking transfers & customer service management systems. As defined by Hamid and Amin et al. (2007), Internet Banking is a powerful means of enhancing competitive advantages that should be comprehensive, communicative & transactional according to the needs of local customers. HSBC is one of the few international banks that can compete effectively with local banks in Malaysia & Thailand related to Internet banking, as stated by these researchers. Also, this is the only bank in the world that offers secure ID tokens to the customers for Internet Banking (Goodwin. 2006).
Another main success factor for HSBC is its focus on such unique consumer needs through targeted marketing such as the pet insurance deal in the spotlight document. Lemon and Seiders (2007) via the HSBC website provided another niche objective of HSBC facilitating fund transfers for immigrants back to their respective countries. This service is specifically very popular in markets like Mexico and Philippines that are not core targets of many multinational banks. As a result of these deals, HSBC clients view the bank as socially conscious and creative that contributes to the organization’s brand equity. Sirkeci (2008) presented another niche positioning by HSBC whereby they target the needs of ethnic population of developed countries and offer customized products for them. To serve this segment, they have hired frontline staff from the target communities to ensure better customer friendliness.
In nutshell the primary competitive advantages of localization competencies and ability to target niche segments has ensured the current global positioning of HSBC as such.
Where is HSBC Vulnerable and What Should they Watch for?
McDonald and Chernatony (2001) reported that while the competency of localization is evident very strongly in the parent brand, the same is not reflected adequately in promotion of individual products like Meridian, Vector, Orchard, etc. Moreover, the benefits of individual products of HSBC are not communicated adequately through product branding exercise. This leads to tight correlation of individual product lines with the parent brand thus risking the HSBC brand equity in a location due to failure of a product line. This is a significant weakness which HSBC should look into. Another weakness that HSBC could face is linked to its sheer scale and the complexities of incorporating global functionalities & performance management. The global engagement of top executive team and their impact on organizational environment & performance may be key vulnerable areas of HSBC (Ready and Conger. 2007).
Author’s Recommendations to Senior Marketing Executives of HSBC
The author recommends that HSBC should focus on developing individual brand equities of the product lines in the form of brand extensions or else developing altogether new brands. This phenomenon will result in additional brand equities of HSBC and will de-link the product branding with corporate branding thus reducing the risk of brand dilution due to product non-performance. In addition, HSBC will concentrate on the internal organizational climate, efficiency & credibility by enhancing visibility, dedication and engagement of management.
HSBC is perceived to be demonstrating social responsibilities by offering tailored products for niche markets primarily targeting unprivileged classes (like ethnic marketing, positioning products for unprivileged countries, etc.) as reported by the literatures by Lemon and Seiders (2007) and Sirkeci (2008). It would be interesting to debate how this strategy of HSBC is an integrated part of their localization competency.
The global development architecture of HSBC is based on its age-old program called Hexagon. In this context they are facing a threat of brand dilution if the market experts start pointing fingers towards the legacy of their core banking system. May be the phenomenon is just waiting for a large Internet based attack to happen. What challenges does HSBC face in retaining such an old horse against competition as Citi Bank, for its core banking operations? Are they risking their branding by virtue of their Hexagon system being perceived as “age old” and vulnerable to emerging threats that may exploit its vulnerabilities? What efforts will HSBC make to demonstrate to its clients that their Hexagon system is as stable and effective as any other banking system in the world?
The author presents another discussion point pertaining to the way HSBC is operating globally. The bank is registered in different names in various countries and had carried out a global re-branding exercise early in this millennium of their acquired subsidiaries. Is it that the branding of “World’s Local Bank” has helped HSBC in mitigating the risk of their brand dilution due to multiple legal names of operation across the world? (Lomax and Mador.2002)
The author of this short paper has presented the key success factors and vulnerabilities of HSBC and has presented some key discussion points about the business model & branding of HSBC to be debated in the class.
- Goodwin, Bill. (2006). HSBC Business Users to get two factor security. Retrieved on 20 March 2009. Available at Home > IT Management > Risk Management. ComputerWeekly.com.
- Hamid, Mohamad Rizal Abdul Hamid and Amin, Hanudin et al. (2007). A Comparative Study of Internet Banking in Malaysia and Thailand. Journal of Internet Business. Issue 4. pp2-18.
- Lemon, Katherine Prof. and Seiders, Kathleen Prof.. (2007). Re-defining Customer – Transcending the core customer model. Carroll School of Management. Boston College. pp29-30.
- Lomax, Wendy and Mador, Martha. (2002). Corporate Re-branding – Learning from Experience. Kingston Business School. Occasional Paper Series No. 48. Copyrighted by Kingston University. pp4.
- McDonald, Malcolm H.B. and Chernatony, Leslie De et al. (2001). Corporate Marketing and Service Brands – Moving beyond the fast moving consumer goods model. European Journal of Marketing. Vol. 35. Iss3/4. pp335.
- Montgomery, Jolene. (2008). The Role that personality & motivation play in consumer behaviour – A Case Study on HSBC. Business Intelligence Journal. Case Study 3. pp128-133.
- Peffers, Ken and Tuunainen, Virpi Kristiina. (1999). Expectations and Impacts of a Global Information System: The case of a global bank from Hong Kong. IEEE Transactions on Engineering Management. 1999. pp17-37.
- Ready, Douglas A. and Conger, Jay A. (2007). Make your company a talent factory. Harvard Business Review. 2007. pp3-4.
- Sirkeci, Ibrahim. (2008). Ethnic Marketing Potential in England and Wales: New Evidence from the 2001 UK Census. Asian Journal of Marketing. Vol.2. Iss.1. pp2.