Brand positioning in financial services

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Brand positioning in financial services

INTRODUCTION

Positioning the brand has been long acknowledged as a core branding activity. This involves selecting specific attributes with which it is desirable for the brand to be associated. The marketing/ brand manager then develops a plan to establish and/or strengthen this association via marketing communications. These activities take up a large amount of company resources, in both management time and money. They are undertaken with the hope that if successfully executed, customers will be more likely to buy the brand and/or pay a higher price.

One of the aspects implicit in most positioning literature is that there are some positions with which it is better for the brand to be associated, than others. Some criteria given for this are that the positions are distinct from competitors (ie unique), strong, and prevalent among consumers. To date, little empirical research has been undertaken to test which attributes are better for positioning purposes. This is an important question given that in most marketing communications there is only the opportunity to communicate a simple message that is usually based around a single attribute. A marketing manager, therefore, has to decide upon the best position to communicate, but has little guidance available to make that decision.

This paper tests six different potential positioning strategies for financial services firms. To establish which position was ‘better’, the relationship between the positioning strategies and customer vulnerability was tested. A customer was considered to be vulnerable if they had a high probability of defecting from the brand they currently used. Defection in financial services is when a customer moves most or all of their banking business to an alternative financial institution. This is a key metric for financial services organisations as it can be a large influence on the company’s profitability. The premise of this research is that positioning attributes that are better for a brand to be associated with will have a stronger negative relationship with customer vulnerability. The relationship with customer vulnerability is tested over time, which is important for establishing the potential longevity of any better positioning attributes that are identified.

The format of this paper is as follows. In the next section, the concept of positioning and related literature is discussed. Following this is a section on customer defection/retention and their importance to financial services firms, which leads into the research questions addressed in this paper. The research methodology and data collection are then detailed. The results are then presented followed by a discussion. The implications, limitations and future research recommendations conclude the paper.

 

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