Abstract
Recent years have a witnessed a growth in the finance sector' s profitability, underpinned by a healthy economic and business environment. Other positive drivers include rising consumer demand, a reduction in operating costs, an increase in financial intermediation services and a revival in the stock market.
This increase in profitability has driven promotional activity, and justifies advertising and other marketing-related expenditure.
This report looks at the different strategies used and approaches taken by financial services providers to successfully promote their brands, products and services, and to effectively communicate with their target audience. It serves to show that marketing can, and often does, work. However, its success relies on a number of factors, including the right approach and a thorough understanding of customer needs, wants and whims.
Table of Contents
- Issues in the Market
- Scope of the report
- Definitions
- Abbreviations
- Market in Brief
- Sector profitability boosts marketing activity
- The core challenges facing financial marketeers
- The benefit of branding
- Standing out from the crowd
- How advertising can help
- The finance sector spends more than any other on above-the-line advertising
- Assessing ad recall -- Mintel' s consumer research findings
- More people are responding to online advertising...
- Figure 1: Proportion of adults who have purchased products in response to financial advertising, by type, 2004 and 2006
- ...while direct mail is being read by a declining proportion
- Figure 2: Treatment of financial direct mail, 2004 and 2006
- So what makes marketing work?
- Some final points to consider
- Figure 3: Aspects which make consumers take note of financial adverts, 2004 and 2006
- Looking ahead
- Trends from Mintel Inspire
- Trend 1: "The Influentials"
- Definition
- Context
- Market touchpoints/implications
- Trend 2: Marketing as decipherment
- Definition
- Context
- Market touchpoints/implications
- Trend 3: The Name Game
- Definition
- Context
- Market touchpoints/implications
- The Business Environment
- Industry transformation
- The economic climate
- Sector profitability
- Figure 4: Gross operating surplus of financial corporations, 1998-2004
- Prospects
- Marketing activity and expenditure
- Funding relies on a host of factors
- Figure 5: Factors impacting on marketing activity and expenditure, 2007
- Marketing Concept and Orientation
- Matching business capabilities with customer wants
- Customer ' needs' and ' wants'
- Creating customer demand
- Identifying the target audience
- Understanding consumer needs and behaviour
- The most common marketing models
- The Marketing Mix
- Figure 6: The Marketing Mix
- Plenty more Ps
- Converting Ps into Cs
- An evolving science
- Communicating ' benefits' via advertising and promotion
- An explosion of channels
- Television
- Cinema
- Radio
- Outdoor
- Printed advertising
- New media
- Different approaches
- Direct marketing
- Direct-response advertising
- Product placement
- Sponsorship
- Public relations
- All publicity is good publicity: the Abbey approach
- Marketing Obstacles
- Figure 7: Summary of main obstacles to financial services marketing
- The nature of the beast
- Figure 8: The product life arc
- Identifying ' ready-to-buy' consumers
- Product complexity and consumer apathy
- Figure 9: Level of interest in financial services advertising and the financial press, 2004-06
- Certain sectors fare worse than others
- Tackling the intangibility issue
- Using imagery
- The good life
- Risky business
- The fear factor
- A matter of trust
- Misleading claims
- Financial companies must adhere to strict regulatory controls
- Consumer Credit Regulations 2004
- Distance marketing regulations 2004
- The regulatory process is not tough enough, say MPs
- Brand Power
- An indelible mark
- Branding concepts
- Figure 10: Hierarchy of branding concepts
- In the limelight
- Brand extension
- Multi-brands
- A common phenomenon
- Brand dominant
- The Role of Advertising & Promotion
- Advertising and promotion fulfil many purposes...
- ...one of the most important is customer communication
- Customer retention is also vital
- An uphill struggle
- Figure 11: Attitudes toward advertising, 2004-06
- Stimulating purchase behaviour
- What makes advertising effective?
- Figure 12: Factors which increase and decrease effectiveness
- The celebrity bubble
- Use of humour
- Responsible advertising
- Making the right noises
- Talking the talk
- Advertising Expenditure Trends
- Advertising requires a big investment of time and money
- The finance sector spends the most on advertising...
- Figure 13: Total advertising expentidure, by industry sector, 2002-06
- The impact of regulation
- ...but companies have reduced their spending on direct mail since 2004
- Figure 14: Total advertising expenditure -- financial sector, by media type, 2002-06
- Increased investment in Internet advertising...
- ...benefiting other channels
- Figure 15: Distribution of advertising expenditure -- finance sector, by media type, 2002-06
- Internet advertising pulls ahead
- Adspend on savings accounts, mortgages and general insurance has risen
strongly
- Figure 16: Total advertising expenditure -- financial sector, by main product category, 2002-06
- The more commoditised financial products attract the greatest adspend
- Figure 17: Distribution of advertising expenditure, by main product category, 2006
- General insurance products claimed the largest share of advertising expenditure in 2006
- Falling demand for consumer credit products will impact on adspend on loans and credit cards
- Leading Finance Sector Advertisers
- Lloyds TSB was the highest-spending finance advertiser in 2006
- Figure 18: Top 20 advertisers in the finance sector, by expenditure, 2005 and 2006
- Multiple media options
- Figure 19: Top ten advertisers in the financial services sector, by media type, 2006
- Direct mail appeals to plastic card issuers and insurers
- Personal Loan Express and Virgin Money are proactive online
- Top ten TV advertisers
- The press holds wide appeal
- Measuring Effectiveness
- Types of advertising response
- Advertising Response Matrix
- Figure 20: The four main types of advertising response
- Different levels of response
- Primary processing
- Secondary attention
- The goal of brand loyalty
- Defensive advertising
- Testing the waters
- Short-term effects
- Tracking
- Single-source research
- Market response modelling
- Long-term effects
- Reinforcement
- Brand equity
- The Consumer -- Ad Recall
- Survey background
- Halifax' ' Big Brovaz' ad achieves highest recall rate
- Figure 33: Consumer views on seven TV adverts, by selected finance companies, November 2006
- Barclays' personal loan ad is the least recognised
- Attention grabbers
- Ad frequency: getting the right balance
- Being clever can also be confusing
- Barclays' personal loan ad appeals more to men than women
- Figure 34: Recall and view of Barclays' TV ad, by gender, age and socio-economic group, November 2006
- Capital One' s ad is viewed more favourably by younger adults
- Figure 35: Recall and view of Capital One' s TV ad, by gender, age and socio-economic group, November 2006
- Scottish Widows evolves the brand, while remaining committed to its core
values
- Figure 36: Recall and view of Scottish Widows' TV ad, by gender, age and socio-economic group, November 2006
- Halifax' Broadway act polarises the public
- Figure 37: Recall and view of Halifax' TV ad, by gender, age and socio-economic group, November 2006
- NatWest seeks to appeal to the disgruntled
- Figure 38: Recall and view of NatWest' s TV ad, by gender, age and socio-economic group, November 2006
- Most consumers are not carried away by HSBC' s takeaway ad
- Figure 39: Recall and view of HSBC TV ad, by gender, age and socio-economic group, November 2006
- Barclaycard hits the right note with men
- Figure 40: Recall and view of Barclaycard' s TV ad, by gender, age and socio-economic group, November 2006
- The Consumer -- Behavioural Response
- Over two thirds of consumers follow up on adverts
- Figure 41: Proportion of adults who have sought information in response to different types of financial advertising, 2004 and 2006
- Implications
- Men are twice as likely as women to respond to online advertising
- Figure 42: Proportion of adults who have sought information in response to financial advertising, by gender, age and socio-economic group, November 2006
- Implications
- TV ads make considerable impact on the under-35s
- Implications
- ABs most likely to respond to text messages and emails
- Broadsheet readers are most likely to respond to press ads
- Figure 43: Proportion of adults who have sought information in response to financial advertising, by new technology usage, newspaper readership, commercial TV viewing, TV region and ACORN category, November 2006
- Regional variances
- Implications
- Over a quarter of consumers make a purchase in response to ads
- Figure 44: Proportion of adults who have made a purchase in response to different types of financial advertising, 2004 and 2006
- Implications
- TV ads are most effective at targeting the 25-34 age group
- Figure 45: Proportion of adults who have made a purchase in response to financial advertising, by gender, age and socio-economic group, November 2006
- Implications
- The under-45s are most influenced by advertising
- Gender differences
- Ads tend to target the higher socio-economic groups
- Are providers succeeding in targeting workers via primetime ads?
- Figure 46: Proportion of adults who have made a purchase in response to financial advertising, by new technology usage, newspaper readership, commercial TV viewing, TV region and ACORN category, November 2006
- Internet ads snaffle shoppers
- Figure 47: Proportion of adults who have sought information or made a purchase in response to financial advertising, November 2006
- Link between ad response and product holdings
- Figure 48: Financial products owned, by type of response to advertising, November 2006
- CHAID analysis identifies target groups
- What is CHAID analysis?
- The main target groups identified
- Figure 49: Target groups identified for the main types of advertising media, November 2006
- Who reads direct mail?
- Figure 50: Treatment of financial direct mail, 2004 and 2006
- Improving the odds of people reading your mail
- A small, but growing, proportion of people never read direct mail
- Younger people are more receptive to direct mail
- Figure 51: Treatment of financial direct mail received, by gender, age, socio-economic group, lifestage and marital status, November 2006
- A fifth of mortgagors will read direct mail sent by a familiar brand
- Figure 52: Treatment of financial direct mail, by working status, tenure, TV region and ACORN category, November 2006
- Targeting opportunities
- Getting people to read it in the first place is half the battle
- Figure 53: Proportion of adults who have sought information and made a purchase, by treatment of financial direct mail, November 2006
- One in 20 adults do not receive direct mail
- Figure 54: Demographic profile of adults who never receive direct mail versus the total sample, by gender, age, socio-economic group, TV region and ACORN category, November 2006
- Implications
- The Consumer -- Response Stimuli
- Advertising bells and whistles
- Figure 55: Aspects which make consumers take note of financial adverts, 2004 and 2006
- Being humorous can help to win over consumers
- Celebrity saturation backlash?
- Entertain and inform: the best approach
- Figure 56: Aspects which make consumers take note of financial adverts, by type of response to advertising, November 2006
- Targeting those who are already in the market
- Cluster analysis
- What is cluster analysis?
- Figure 57: Total sample segmented into four ad-response clusters, November 2006
- Figure 58: Aspects which make consumers take note of financial adverts, by ad-response cluster, November 2006
- Bargain Hunters
- Humour-mongers
- Motto Admirers
- Disengaged
- Bargain Hunters respond best to advertising...
- Figure 59: Proportion of adults who have sought information in response to different types of financial advertising, by ad-response clusters, November 2006
- ...over half have bought a product directly as a result of ad exposure
- Figure 60: Proportion of adults who have made a purchase in response to different types of financial advertising, by ad-response clusters, November 2006
- Bargain Hunters are selective readers of direct mail
- Figure 61: Treatment of financial direct mail, by ad-response clusters, November 2006
- Older age groups are more likely to be Disengaged
- Figure 62: Ad-response clusters, by gender, age, socio-economic group, marital status, lifestage and working status, November 2006
- High-income households are twice as likely to be Humour-mongers
- Figure 63: Ad-response clusters, by tenure, gross annual household income, region and ACORN category, November 2006
- Mid-market tabloids attract a fair share of Motto Admirers
- Figure 64: Ad-response clusters, by new technology usage, newspaper readership, commercial TV viewing and supermarket usage, November 2006
- Further analysis
- Summing Up and Moving On
- Continued investment in marketing is vital for survival
- The best advertising hooks
- Brand salience is key
- Direct mail will continue to dominate...
- ...but how effective is it?
- New media, new opportunities
- Converging technologies
- Internet advertising set to rocket
