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An Approach to an Accountable Client-Communication Mix in the Banking Industry

Exemplified at WestLB AG

Masterarbeit 2007 101 Seiten

BWL - Unternehmensführung, Management, Organisation


Table of Contents

List of Abbreviations

List of Figures

List of Tables

Executive Summary

1 Introduction
1.1 Background
1.2 Motivation
1.3 Problem Definition
1.4 Objective
1.5 Methodology

2 Marketing and Business Context of WestLB AG
2.1 Organisational Integration of Marketing
2.2 Functions of Marketing
2.3 Customer Groups and Product Lines
2.3.1 Customer Groups
2.3.2 Financial Product Lines

3 Financial Services Marketing
3.1 Traditional Idea of Marketing Mix
3.2 Integrated Marketing Communications
3.3 Characteristics of Financial Services Products
3.4 Services Marketing in Banking
3.4.1 General Thoughts
3.4.2 Specialities of Services Marketing in Banking
3.4.3 B2B-Marketing in the Banking Industry
3.4.4 The Importance of Customer Satisfaction and Retention

4 Communication Marketing Mix at WestLB AG
4.1 Overview of Communications mix
4.2 Presentation of Communication Mix Instruments
4.2.1 Corporate Identity
4.2.2 Sales Promotion
4.2.3 Advertising
4.2.4 Online Marketing
4.2.5 Event Marketing

5 Theory for Performance Management in Marketing
5.1 Performance Measures
5.2 Performance Measurement Systems
5.3 Marketing Research
5.4 Benchmarking
5.5 Marketing Controlling

6 Marketing Performance Management at WestLB AG
6.1 Discussion on Marketing Controlling Targets
6.2 Job Responsibilities

7 Case Studies of Marketing at WestLB AG
7.1 Campaign “WestLB public”
7.1.1 Introduction to Campaign “WestLB public”
7.1.2 Performance Measurement of Campaign “WestLB public”
7.2 Event Marketing Controlling

8 Results

9 Conclusion

Integral Total Management Approach (ITM)


A.1. Agenda of “WestLB public” Congress, 07th March 2007
A.2. Questionnaire for Participants
A.3. Questionnaire for Non-Participants

List of Abbreviations

illustration not visible in this excerpt

List of Figures

Fig. 1: Expectations of different stakeholders on Marketing.

Fig. 2: Structure of thesis.

Fig. 3: The research process in a phase diagram, applied for this paper.

Fig. 4: Organisational chart for “Group Communications“.

Fig. 5: Dotted-line-reporting about marketing activities within WestLB AG.

Fig. 6: Organisational chart of Group Marketing.

Fig. 7: WestLB’s international service network.

Fig. 8: WLB’s one-stop finance concept.

Fig. 9: Bank Marketing Management System.

Fig. 10: Extended Services Marketing-Mix-8P.

Fig. 11: The tangible-intangible continuum for goods and services.

Fig. 12: Performance characteristics of financial services.

Fig. 13: Quality-relevant specialities of financial services.

Fig. 14: Key determinants of perceived service quality.

Fig. 15: Influencing of customer’s expectation and quality perception through customer service mix.

Fig. 16: Lasswell-Formula of corporate communication.

Fig. 17: Three criteria for an “optimal” customer retention.

Fig. 18: Levels of controlling customer retention (with selected measures).

Fig. 19: Overview of instruments of communication mix.

Fig. 20: Framework to manage the symbolisation of services by means of communication media.

Fig. 21: Pillars of the corporate identity concept.

Fig. 22: Principle of transaction funnel on Web sites.

Fig. 23: The three dimensions of performance.

Fig. 24: Dimensions of expanded traditional approaches of performance measurement.

Fig. 25: Inside the customer “black box”.

Fig. 26: Interdependencies between marketing research and marketing.

Fig. 27: Typical phases of a marketing research process.

Fig. 28: Basic model of empiric marketing research.

Fig. 29: Systematics of benchmarking variants.

Fig. 30: Exemplary approach of benchmarking.

Fig. 31: Learning approach in pre-tests.

Fig. 32: Post-test approach with learnings.

Fig. 33: Portfolio of individualisation degree in terms of product and customer relationship.

Fig. 34: Marketing research at WestLB. .

Fig. 35: PPP contract model for project finance.

Fig. 36: Campaign overview WestLB public in spring 2007 (schedule and media mix).

Fig. 37: Congress participation statistics.

Fig. 38: Q1 and Q5/Participants: Benefit for work resp. repetition of congress.

Fig. 39: Q1 and Q5/Non-Participants: Benefit for work resp. repetition of congress.

Fig. 40: Q2/Participants: Mix of political and professional topics.

Fig. 41: Q3/Participants: Importance of information exchange.

Fig. 42: Q4/Participants: Opportunity of information exchange.

Fig. 43: Q7/Participants: WestLB’s image in the public sector.

Fig. 44: Q5/Non-Participants: WestLB’s image in the public sector.

Fig. 45: Benchmarking of corporate image in the banking industry (April 2007).

Fig. 46: Statistics of the online campaign for “WestLB public”.

Fig. 47: Events per category.

Fig. 48: Number of events and related costs in 1,000 Euro(for the year 2006).

Fig. 49: Cost distribution per quarter in 2006 (Fairs not recorded in Q1/2006).

List of Tables

Tab. 1: The 20 Largest German Financial Institutions.

Tab. 2: Job responsibilities within Marketing Performance Management Team.

Tab. 3: Product range for Public Clients.

Tab. 4: Common communication platforms.

Tab. 5: Types, potentials, and levels of customer retention.

Tab. 6: Definition of promotional tools (resp. communication mix).

Tab. 7: Measures for Web Performance.

Tab. 8: Changing connotation of the term "business measure" since the 1930s.

Tab. 9: Quantitative, content, and time structure of measures.

Tab. 10: Dimensional analysis of performance measurement systems.

Tab. 11: Traditional measurement systems and performance measurement systems.

Tab. 12: Communication media and associated measurement techniques.

Tab. 13: Strengths and weaknesses of different types of communication at interviews.

Tab. 14: Statements in German literature according to marketing controlling.

Tab. 15: Measures for productivity of communications politics.

Tab. 16: Suggested topics for congresses in future (open question No. 6 for participants):

Tab. 17: Questions according to the perception of different banks (advertising monitor).

Tab. 18: Event categories for event marketing controlling tool EVIVA.

Tab. 19: Discussion about methods in theory and practice.

Executive Summary

Modern industrialised societies have transformed into service economies. Within the tertiary sector, financial and banking services have become more important with regard to capitalisation of all kinds of business. In addition, many services businesses have extended their fields of activity to keep pace with globalisation. A key driver for a successful business is keeping and enlarging the customer base.

Such a demand calls for a competitive marketing mix. In service industries, the classical mix instruments product, price, promotion, and placement are supplemented by service-related tools people, process, and physical evidence. Within this toolset, this paper focuses on the promotional mix of financial services marketing in theory. This makes the base for a closer practical-oriented exploration of the communications marketing mix at WestLB AG (WestLB). This German major bank concentrates on the business-to-business (B2B) market, which include structured syndicate finance, structured finance, project finance, and many other kinds of deals for different customer groups. In B2B finance, the role of the relationship between the counterparts is apparently higher than in other business partnerships. This means a very strong importance of communications policy to the market. WestLB uses different communication channels to its (potential) customers. One powerful way is shaping a campaign containing a set of different media and marketing activities.

Whereas activities like campaigns are necessary to attract interest from the market, these campaigns cause high expenditures and efforts. This explains a cost-benefit-analysis to find a trade-off between what is useful and effective respectively what leads to a waste of resources. This is also called a costs-to-serve discussion. Is a company’s marketing activity appropriate for its targets? Does it pay for the corporate goals? Does the marketing department explain its efforts? Moreover, is there an alignment of corporate and marketing objectives? Especially in service industries like banks, it is much more difficult to find an anchor to tie the communication mix to economic output and success. However, it is important to offer a theoretical base to assess these marketing activities. Sciences, business administration and economics included, have established different ideas and approaches to measure performance. As a first step, the historical development and the different types of measures are reviewed in this paper. They can be combined to entire performance measurement systems, which manage a special business area (e.g. marketing) or even a whole company strategy. They serve a better understanding and interpretation of market research results or the set-up of benchmarks. Finally, they can also be applied for controlling purpose in the marketing department. Formerly, marketing was often allocated a notable amount of funds for its activities without deeper analysis of the reasons and purposes. Today, the pressure of cost cutting asks for an efficient, explainable output. With the force of growing competition on the one hand (so-called “meritocracy”), and modern opportunities of information technology on the other, the need to better manage and control the marketing expenditures is evident and it can be handled in an adequate way. Terms like marketing auditing and marketing performance have been created around this discipline.

Knowing the special marketing activities of a service company like WestLB, and understanding how to design powerful creative measurement tools, leads to the idea to prepare special controlling concepts for those activities. These concepts can cover different dimensions, e.g. they are related to special product groups or they target a special customer focus of financial services. In addition, campaigns stress the corporate image generally (and without a certain product- or customer-related topic). At the example company, the set-up of a marketing performance controlling is still in progress. Therefore, the author aims at producing useful ideas on how to further establish within the decision-making process of the marketing department with company-related examples of performance-monitoring methods. An extra chapter describes the rollout and monitoring of a marketing campaign in the form of a practice-oriented case study. That is, which different marketing activities were assembled to address the group of public authorities? The results do not only concentrate on the real data of given examples and cases, but try to appraise a more general view on the provided theoretical base as well as its practical application in real-world business. An applied research technique usually offers potential to be further improved and aligned to a certain problem or question. In addition, it is interesting to look upon possible theory improvements. All in all, there are discrepancies and overlaps between theoretic models and approaches in contrast to deployed applications and methods within a service organisation (and its daily work).

One conclusion of this dissertation may be the thought that it is always useful to collect data and bring them properly into a useful form to describe and manage a certain business problem. Even in financial services marketing, where soft factors between business partners play a dominant role, it is worth modelling adequate approaches. Although soft factors are difficult to capture, these modern ideas and settings help to form a comprehensive base for the future. The more experience of techniques and data series an organisation has, the better a company can benefit from it. Nevertheless, data serve as a support function and cannot replace human decision-making. The future will bring better technical facilities and companies will collect and store more relevant data. However, it will remain difficult to tie cause and effect to each other for communication processes of intangible services in an anonymous market of relationships.

1 Introduction

1.1 Background

The recent decades have been characterised by the development from the industrial age towards a service economy. Knowledge and information have become the most essential production factors. When services and intangible assets are offered, information and soft factors are even more important elements of business communication. Any kind of worldwide communication between (anonymous) business partners has been enabled by the progress of information and telecommunication technology. The banking sector is one important part of a service economy. With regard to the globalisation the banking industry still faces radical changes. This paper is especially addressed to the business operations of WestLB AG (WestLB), a major German bank that primarily operates both national and international business-to-business (B2B) banking[1]. WestLB operates in a partnership with the savings banks, which run the business-to-customer (B2C) banking of the mass market for private customers (esp. retail banking). In addition, WestLB’s subsidiaries Readybank and Weberbank attend to private clients, whereas Readybank runs bulk-lending business and Weberbank offers private wealth management to German customers.

In particular, this reading explores a number of relevant questions within the scope of well-managed marketing and its controlling. Latest organisational restructuring within the bank’s marketing organisation have encouraged a rethink of how to better manage marketing communications to the clients and where to spend its marketing investments. One important change means that one worldwide marketing budget has been applied to the entire bank. This is the second largest departmental cost budget after information technology to be controlled at WestLB. All these present circumstances are described in detail in a separate chapter including organisational questions, marketing teams, customer and product groups.

Tab. 1 : The 20 Largest German Financial Institutions.

Abbildung in dieser Leseprobe nicht enthalten

[a]: Group Balance; [b]: Staff incl. apprentices & part-time employees; year-end-values; [c]: After change of risk provision.

(Source: Follow. Karsch (2007), abridged version).

1.2 Motivation

Due to the homogeneity of the offered finance products, it is especially difficult for banks to position and distinguish themselves from the competition. Consequently, marketing success of financial services products requires communication activities such as imaging, loyalty factor, persuasion, and so on. Traditionally, the marketing department is responsible for shaping such a competitive communication on products and image towards the company’s markets within an affluent society, where the customer can choose from different offers.

With regard to these efforts, a business and sales responsible tends to doubt the sense and benefit of all the expenditures associated with advertising and marketing. (He usually does not mind internal communication, while he places external marketing more in a “nice-to-have” category). His scepticism is based on a complex overall environment in which marketing is integrated. This makes it difficult to give clear answers on its effects on a company’s development. Therefore, it would be helpful to structure an approach to be able to better understand a company’s communication mix as well as if any marketing budget is usefully spent. Ideally, demonstrating a positive impact of marketing activities to business success would be welcome.

In business literature, these questions are currently discussed as “costs-to-serve” approaches. Also, an internal competition of different opinions on this question can often be observed among different stakeholders (mainly sales units, marketing department, controlling) in any company. In the particular context of centralised marketing activities at WestLB, the marketing department has to verify and justify the useful application of its activities and its budget allocation. At least once a year, it is invited to inform the responsible cost controlling department, the sales units as well as the company Board of Directors. This leads to the key question: Have WestLB’s marketing activities met their goals? And, consequently, have they supported economic success?

Abbildung in dieser Leseprobe nicht enthalten

(Source: Own creation).

Fig. 1 : Expectations of different stakeholders on Marketing.

When discussing and researching the problem to measure marketing mix activities and derive rules from the results, one often gets the answer that it is practically not possible to do this precisely. Nonetheless, this paper still aims to examine if it is possible to prove the relation between marketing activities of the promotional mix and “business success”. Basically it points out what is feasible and where there are limits.

1.3 Problem Definition

In particular, this paper deals with WestLB’s communication mix towards its clients. WestLB’s core business focuses on national or international B2B operations with a wide range of different customer types. Its operations concentrate on single products for “big customers”. Here, the provided financial products are often tailor-made to a certain set of customer requirements. This setting is very different from a B2C market, where one bank addresses its services on standardised products to a noteworthy mass of clients.

With regard to control a client-communication mix, the nature of sales object is another essential aspect. In contrast to consumer markets, it is more difficult to measure financial services. Given a banking product, any kind of data collection can easily lead into interpretation problems or even errors when intending to measure the effect or success of a communication mix. For example, how to properly define an exotic, heterogeneous mix of addressed client focus groups for a bank’s information? First of all, it becomes difficult to materialise any kind of “volatile” communication effect, as lots of communication channels are of influence. And even when it can be captured, it still remains difficult to isolate it with regard to a so-called defined chain of cause and effect.

An example like this illustrates the general problem of measurability and comparability of recorded market data. Related problems are e.g. which goals are useful to be measured or which benchmarks should be applied. As outlined above, the researcher faces a specific situation of WestLB as a financial service provider in a (partly) anonymous B2B-market. This is further discussed in the second chapter.

1.4 Objective

This paper aims firstly at supporting WestLB’s marketing activities by collecting data and documenting the present situation. From there, with the discussion how to further extend an approach for controlling and managing the marketing efficiency. This approach should make the communications mix activities more measurable and accountable. Theoretical thoughts on performance measurement, marketing mix, and WestLB’s business model will help to deduce conclusions to be applied to given real-world cases.

To avoid building up too high expectations, one should attempt to make progress in small steps. First of all, it can be assessed if any information has physically reached its destination. This would be a prerequisite goal to continue an analysis on any business-related success of the marketing activities. For this purpose, it is obvious to integrate marketing performance analysis into an overall enterprise planning and reporting system. Next to defining individual goals, it is also useful to fall back on benchmark data and experience from market research institutes. Two representative case studies, one customer-related and one controlling-tool-related, are investigated in detail to get an idea of how to apply the presented thoughts (chapter 7). A case study does not only supply material in form of data, but also bring new modelling layouts. This means that one does not only collect and expand a database, but also collects experience by designing new measurement ideas (e.g. individual WestLB benchmarks, scorecards, and ratings). Which drivers determine these models? These can be the choice of communication channels, certain projects and events, or entire campaigns.

The data recording and interpretation problems in this complex research field invite managers to follow their traditional belief in being right to trust in their “intuition” or to apply “rules of thumb” when planning marketing budgets. Instead, a more modern approach could be deriving decisions from an empirical data base. Thus a growing community of experts warns that refusing empirical findings will result in wrong decisions on a long-term basis. How to handle these two sides of a coin is a general question of management decision making to be looked at.

1.5 Methodology

The composition of this paper is aligned to the basic research plan. In order to better understand the text, the author composed a drawing of the document structure. This explains the research schedule that forms the basis of this master’s thesis. In the introduction, the research problem is defined within the context of a general motivation.

The first chapters inform about business theory and the company WestLB AG that is the subject of the applied business cases. They describe how the bank’s marketing is organised and what kind of communication mix activities are operated (refer to left-hand part of the figure). In parallel, useful thoughts and facts about marketing concentrate on the typical conditions in the financial world. Focussing on the research problem, theoretical basics introduce all around marketing-relevant performance management (see the discussion in the chapters on the right-hand side of the figure).

Abbildung in dieser Leseprobe nicht enthalten

(Source: Own creation).

Fig. 2 : Structure of thesis.

The installation of a practical, structured approach to manage WestLB’s communication mix requires a careful selection of relevant performance measures and tools. In addition, different levels of helpful information could be derived from an analysis of WestLB’s communication activities. All these questions are discussed in chapter 6. The findings could qualify to enlighten a kind of “figurative black box” that represents the efficiency of usually applied marketing activities at WestLB (as outlined in chapter 4). A case study on the “public day” campaign in spring 2007 provides practical feedback in the sphere of marketing controlling. Here the researcher can deduce theoretical rules into the given practical case (likewise as below-mentioned in a theoretical research schedule). Second, one controlling tool for event marketing is presented.

Research Process

Abbildung in dieser Leseprobe nicht enthalten

(Source: Follow. Sekaran (2003), p. 117).

Fig. 3 : The research process in a phase diagram, applied for this paper.

Generally speaking, research methods span from theoretical analysis and application of business literature, research papers, brochures, relevant journals, and online research to provide evidence of this thesis paper. In addition, university studies and consultancy publications ratify the designed solution propositions and scenarios. The use of measurement (or controlling) tools and web marketing software underline the findings. This dissertation continues with the discussion of the results (in chapter 8). Here, the writer looks at them in a more common way to compare theoretical knowledge with practical experience. A conclusion, complemented by a future prospective, closes this paper.

2 Marketing and Business Context of WestLB AG

2.1 Organisational Integration of Marketing

In 2006, WestLB reorganised its marketing activities. The newly reorganised “Group Marketing” is one subunit of “Group Communications” which is responsible for marketing issues across the group.
Next to Group Marketing, Group Communications comprises internal communications, external communications (e.g. press, public relations (PR)), and investor relations as well as web communications and central event management/protocol. “Group Marketing” was consolidated to a single globally responsible unit. An organisational chart describes the new structure of Group Communications/Group Marketing.

Abbildung in dieser Leseprobe nicht enthalten

(Source: Follow. WLB (2007a)).

Fig. 4 : Organisational chart for “Group Communications“.

Formerly, marketing units were incorporated within sales units, whereas today they act independently. Therefore, new reporting lines have been installed (so-called “dotted-line-reporting”). The marketing teams do not only have to report to Group Communications/Group Marketing internally, but Group Marketing also informs other stakeholders (Board of Directors, Controlling, and Sales). Recently, a special reporting line from Group Marketing towards the sales units has been created.

Abbildung in dieser Leseprobe nicht enthalten

(Source: Own creation).

Fig. 5 : Dotted-line-reporting about marketing activities within WestLB AG.

2.2 Functions of Marketing

This subchapter illustrates the functions, which Group Marketing offers. An organisational chart, presented like a “marketing house”, shows the functions of Group Marketing.

Abbildung in dieser Leseprobe nicht enthalten

(Source: Follow. WestLB (2006), p. 25).

Fig. 6: Organisational chart of Group Marketing.

The central marketing department manages the (strategic) positioning of WestLB Group. It also takes care of a consistent corporate design (CD), as well as general conditions for advertising campaigns, branding and sponsoring (as further outlined in chapter 4.2). Brand management comprises brand marketing, legal protection of the WestLB brand, and utilisation rules for the brand (e.g. for subsidiaries). Moreover “Group Marketing” provides decentralised marketing and sales support functions for the business units (refer to the grey-coloured pillars), as well as general support tasks (e.g. marketing-related planning and processing, budgeting, Web marketing, event management, etc.).

Within Group Communications, Group Marketing focuses on client communication and marketing activities. The different sections in the marketing house co-operate with each other. E.g. sales support functions can further “customise” the given template from central marketing for their activities (“sub-branding”) and ask for standard support functions (presented at the bottom of the drawing). Performance management is also a central service to the sales support functions, as indicated by the arrows.

Marketing Performance Management

After the organisational consolidation, a worldwide budget exists for the whole company, spanning from advertising, market research, branding, print products, sponsoring, and client events. This budget is spent for all required marketing instruments. These can be applied for the central functional business (i.e. WestLB Group in general) as well as for the single business units (“Capital Markets”, “Corporate Banking”, and “Savings Banks&Public Clients/Private Banking”). Subsidiaries in WestLB Group like Weberbank AG or Westdeutsche Immobilien Bank (WIB) are not included, as they operate as independent legal entities.

As the designation of the job role marketing performance management implies, it intends to pilot the given monetary and knowledge resources into the right direction. Within the marketing reorganisation of WestLB, this service was installed accordingly. Two project managers serve for the different activities, as described in the table below. E.g. project manager 2 is specialised in the marketing tools “campaigns” and “Web communication” and responsible for the customer group “Corporate Banking”. Both take care of “budgeting” and additional special topics. The customer groups are described in chapter 2.3.1. Moreover, the meaning of the marketing tools is introduced in chapter 4 and their application is described in this paper (especially in the case studies).

Tab. 2: Job responsibilities within Marketing Performance Management Team.

Abbildung in dieser Leseprobe nicht enthalten

(Source: Follow. WLB (2007b), p. 2).

2.3 Customer Groups and Product Lines

2.3.1 Customer Groups

In detail, the following customer groups (or “target groups”) can be presented in the area of B2B marketing:

1. “International Clients” cover investment banking, institutional clients (e.g. charity foundations, healthcare insurances), financial institutions (e.g. insurances, banks), international corporate clients (such as Audi, Volkswagen, Bayer, Tokyo Electric Power Company), and investors. Beside the national market, WestLB has organised an international service network, broken down to the geographical markets UK & EMEA, the Americas, and Asia-Pacific. A responsible desk within one of these economic areas attends to these international clients.
2. “Clients GSA (Germany, Switzerland, Austria)” include big customers as well as mid-sized/mid capitalised customers (e.g. Coppenrath & Wiese, Schmitz Cargobull) in the German-speaking area.
3. Clients with special requirements (and expectations) are public sector clients (including local authorities, municipal enterprises (e.g. FRA-Port)/umbrella organisations as well as central and federal government) and the savings banks in Germany (especially in North Rhine-Westphalia).
4. Private clients are mainly covered by the subsidiaries Weberbank and WestLB Luxembourg SA (outside of Germany), but also through the distribution network of the savings banks.

Abbildung in dieser Leseprobe nicht enthalten

(Source: Follow. WestLB (2007d), p.14).

Fig. 7 : WestLB’s international service network.

The marketing planning process (refer to chapter 6) at WestLB depends on the focus groups as well as the budgets. Next to decentralised planning process and subsequent central coordination of the individual allocation plans, a reporting to the Managing Board is necessary. The aim of marketing planning within WestLB is to provide transparency with respect to all marketing measures within WestLB Group[2].

At the level of the bank as a whole, this enables to identify capacities early enough, to support them in conjunction with the appropriate business units and to provide a positive impact to internal marketing. As one outcome, marketing budgets of all business units can be directed better. Another improvement is the better alignment of the bank’s strategic business goals with those of the business units. Thereby, the marketing of WestLB on the market as a whole is strengthened.

2.3.2 Financial Product Lines

WestLB acts as a universal bank that offers a broad variety of products to the financial markets. However, it rarely handles direct orders from private end customers. Instead, it places special products to be offered by retail banks to the end customer. Group Marketing communicates new and existing products to the markets and to the customer groups respectively. A circle diagram lists a range of typical WestLB products, which all form part of its one-stop finance concept.

Abbildung in dieser Leseprobe nicht enthalten

(Source: Follow. WLB (2007d), p. 44).

Fig. 8 : WLB’s one-stop finance concept.

One big product field is issuing equity derivatives like certificates and similar financial products[3]. The relevant information is provided on a WestLB Web page[4], however, the deals are usually performed by a local savings bank or another financial institution that directly targets private customers. Product managers observe the markets and current topics covered in the media. These imply new product ideas (e.g. for sports events, ecology and energy, culture), which have to be announced.

Another important cornerstone of WestLB’s business is project finance (as one form of structured finance). Globally acting key accounts as well as local mid-sized companies sometimes seek a tailor-made financing of a new project. They need high volume loans to realise their investments in new buildings and plants, the modernisation of research and development departments, new technologies, etc. Above all, they might rely on refinancing in general.

Product range for Public Clients

Special requirements for public clients arise from a particular legal framework for their financing. WestLB’s product portfolio for the public sector is summarised in table form. One finance model is private public partnership (PPP) (ref. to table item no. 6). This is all discussed in more detail in a case study (ref. to chapter 7.1).

Tab. 3 : Product range for Public Clients.

Abbildung in dieser Leseprobe nicht enthalten

(Source: Follow. WLB (2007e), translated from German).

3 Financial Services Marketing

3.1 Traditional Idea of Marketing Mix

Every company designs its own strategy to reply to the environment and its markets. If this strategy is clear, there can be developed a marketing strategy that is based upon the company strategy. Current literature shows that the interplay of company and marketing strategy has become stronger. The company can tie-in its marketing-mix to the marketing strategy while presenting the customer a so-called unique selling proposition (USP) for each strategic business area[5]. The idea of a marketing-mix as “a set of controllable tactical marketing tools”[6] that a company combines to respond to its target markets was first introduced by Culliton (in 1948)[7], and further elaborated by McCarthy (in 1960)[8]. The market player who mixes these parameters in the right way may profit from an increasing market share.

Abbildung in dieser Leseprobe nicht enthalten

(Source: Follow. Meidan (1984), p. 18).

Fig. 9 : Bank Marketing Management System.

Traditionally, the marketing mix consists of four elements (abbreviated as “four Ps”).

Abbildung in dieser Leseprobe nicht enthalten

In the context of services marketing, a supplier can differentiate himself in performing the service by three further elements[9]. These are people, physical evidence, and the service process itself[10].

- People who carry out a certain service
- Physical evidence (or presentation) which means service-facilitating goods (e.g. hire cars) or the environment where a service takes place (e.g. bank office)
- Process (i.e. procedure), that provides the functional aspects of a service, e.g. delivery, queuing systems, punctuality performance and quality of delivery.

Magrath explained this approach of seven mix instruments for services marketing at first[11]. Recent publications have once more underlined the central importance and positioning of the customer. From these recent findings, experts have even recognised a superior mix element as central key for the marketing mix. This is “philosophy/ promise” to the customer, which represents the eighth P. As a whole, an extended marketing-mix-8P can be composed for services marketing as depicted below[12].

Abbildung in dieser Leseprobe nicht enthalten

(Source: Follow. Magrath (1986)

cited Meffert/Bruhn (2006), p. 388).

Fig. 10 : Extended Services Marketing-Mix-8P.

3.2 Integrated Marketing Communications

Considering that any good or service is homogenous to competitive offers, the importance of market communication about a company’s performance has significantly increased. This explains the tendency to plead for a unique communication proposition (UCP) as a substitute for a USP[13]. In any case, a company needs to take care that all media and messages about the company and its product range are communicated to the market in an integrated way.

Kotler and Keller recommend integrated marketing communications (IMG), defined by the American Association of Advertising Agencies[14]. This is a “concept under which a company carefully integrates and co-ordinates its many communications channels – mass-media, advertising, personal selling, sales promotion, public relations, direct marketing, packaging and others – to deliver a clear, consistent and compelling message about the organization and its products.“[15]

Scandinavian business expert Grönroos takes up the same idea, saying that “integrated marketing communications is a strategy that integrates traditional media marketing, direct marketing, public relations and other distinct marketing communications media as well as communications aspects of delivery and consumption of goods and services and of consumer service and other customer encounters. The integrated marketing communications has a long-term perspective[16].”

Tab. 4 : Common communication platforms.

Abbildung in dieser Leseprobe nicht enthalten

(Source: Follow. Kotler (2007), p. 605).

3.3 Characteristics of Financial Services Products

Services products differ from physical goods in many aspects. Therefore, it makes sense to name and explain these services-related characteristics and to derive useful advice for marketing activities from them. In a narrow sense, at least four attributes qualify for being a service[17].


Services are intangible goods, i.e. not physically existent. This could lead to a lack of confidence, as consumers cannot use their physical senses to examine the service value and quality (e.g. by using their sense of touch or taste). To compensate this, the consumer’s argumentation for buying a service can be based upon soft factors like quality, decor, or appearance and qualifications of the service provider. When he searches for the right service, the price plays an important role, of course.

The figure below demonstrates a broad range of tangibility categories[18]. It spans from physical goods like salt (which can be tasted) to sophisticated consultancy and teaching services. Situated in the middle, fast-food outlets provide a mix of tangible as well as intangible goods.

Abbildung in dieser Leseprobe nicht enthalten

(Source: Cf. Kotler et al. (1999), p. 647).

Fig. 11 : The tangible-intangible continuum for goods and services.


At the same time when services are produced, they could be consumed as well[19]. In contrast to physical goods, they cannot be stored for later consumption. However, the service provider often becomes an inseparable part of the overall service (e.g. a bank officer at the counter or a waitress in a hotel), and the customer can participate in the service partially or completely as well. For that reason, both the provider and the customer influence the outcome of the service delivery. This may provide a promising anchor for service marketing[20].

Heterogeneity (variability)

A service is unique, and it is produced and consumed simultaneously. Also, individuals take part, so that it cannot be iterated in exactly the same way. Therefore, quality is not automatically assured. This requires regular review of service quality and customer satisfaction on the one hand, and continual professional education of staff on the other. Besides, services can vary when and where they are offered. This variability makes controlling their quality difficult.


Services are perishable, as they cannot be stored over a period of time for future sale (e.g. untaken seats on a plane or cancelled hotel reservations). This characteristic is also denoted as transience (because of simultaneous production/consumption)[21].

Definition and dimensions of service

Service definition approaches in literature vary by following three different dimensions[22].

1. A potential-oriented formulation expresses that there is a potential to perform a service at all.
2. The process-oriented wording focuses on the activity, i.e. the fulfilment of a service. The involvement of the customer is obligatory, and the synchronicity of service production and consumption is necessary (“uno actu principle”).
3. A result-oriented definition aims at the transition from one state to another that a process induces to a person or an object. The output of a service can be measured with regard to the altered state.

Hilke brings all these three service dimensions together when defining a service as an offered performance capability that is directly applied to a human (or to an object)[23]. Returning to the financial services, their performance characteristics can be split in four dimensions (ref. to chart below).

Performance characteristics of financial services

Abbildung in dieser Leseprobe nicht enthalten

(Source: Kühlmann et al. (2002), p. 9, translated from German).

Fig. 12 : Performance characteristics of financial services.

Recalling the brief introduction into WestLB’s product range in chapter 2.3, the author mentions that the bank provides all of these characteristics. WestLB operates e.g. lending business, payment services, treasury, or forward exchange (like in “one-stop finance”). Next to this short-term business, it offers mid- and long-term consultancy in B2B business (see “financial planning” resp. “lifetime concept”). A “merger-or-acquisition” decision can be an example within a lifetime concept. If customer satisfaction is high, WestLB can profit from cross selling activities.

One key factor to achieve a stronger customer satisfaction is an excellent service quality, because financial services are “me-too”-products with a lower differentiation capability (see top of chart). Therefore, service quality is another opportunity for a bank to distinguish itself from its competitors (next to intangible product characteristics)[24]. It bolsters the customer satisfaction and, thereby, the customer relationship as a whole. In the end, a satisfied customer is willing to accept higher prices during business negotiations. Consequently, it is reasonable to assess and measure customer satisfaction within a business relationship (ref. to chapter 3.4.4).

Abbildung in dieser Leseprobe nicht enthalten

(Source: Follow. Krauter/Kübler/Krauß (2003), p. 111).

Fig. 13 : Quality-relevant specialities of financial services.

3.4 Services Marketing in Banking

3.4.1 General Thoughts

Marketing for services can be derived from their special characteristics as outlined above (ref. to subchapter 3.3). Although consumer marketing and services marketing are differentiated from each other, the basic idea of marketing mix remains the same[25]. A couple of further aspects especially relate to key issues in services marketing which are described here.

Productivity and quality

The nature of services entails a trade-off between productivity and quality. If productivity gets better by quicker serving customers, this more likely means a decline of quality. To control service quality, companies have two levels to measure it[26].

- Technical quality summarises an overall efficiency, e.g. how a bank processes its client accounts with regard to account statements or offered interest rates.
- Functional quality documents the way, how a service is operated at all, e.g. friendliness, bank office facility, customer’s own role (e.g. waiting queues, provided writing utensils and forms).

Seen from the angle of a customer, he evaluates services in two ways – experience and credence[27]. If the customer is able to measure service value, he can rely on his own experience and expectations (e.g. hairdresser, childcare). Without appropriate competency to judge a service provided, he assesses the service provider’s credibility by means of credence (e.g. cosmetic surgery, personal computer repair service). The better a service provider understands the customer behaviour and finally the purchasing decision process, the more he can create fitting productivity and quality levels.

Importance of quality in services

Ten dimensions of quality determine the “perceived service quality”, ascertained as the difference between expected and perceived service (see figure below).

Abbildung in dieser Leseprobe nicht enthalten

(Source: Follow. Kotler et al. (1999), p. 659).

Fig. 14 : Key determinants of perceived service quality.

These ten key determinants can be connected with the 7Ps of services marketing-mix (as introduced in chapter 3.1). Each mix instrument is specialised whether in influencing the customer’s expectation and/or his quality perception. Promotion fulfils both functions. It raises a customer expectation through a performance promise (resp. USP) and it communicates to the customer (incl. knowledge transfer when performing the service). The following chart visualises this double-acting role of the promotional mix.

Abbildung in dieser Leseprobe nicht enthalten

(Source: Cf. Müller (2005), p. 86).

Fig. 15 : Influencing of customer’s expectation and quality perception through customer service mix.

3.4.2 Specialities of Services Marketing in Banking

Four important characteristics, which differentiate services from physical goods have been introduced. Here, they are further examined with regard to financial services marketing[28].

- Intangibility: Although financial services are intangible, they can be “materialised” by printing bank statements, providing insurance certificates as well as issuing real estate passbooks or credit cards[29]. These tangible placeholders remind and reassure the customer of the service product, corporate brand and value. When contracting a B2B transaction with a bank, the business partner can receive a tangible asset in return, e.g. a factory building, a company car, or cash.
- Inseparability: The level of inseparability depends on the type of service and the actual financial service provider. If third party brokers sell banking products, the good name of the actual service provider becomes dependent on the efficiency and reliability of these services. Furthermore, a bank’s technical standard often faces high customer expectations of a financial service (e.g. online banking or automated teller machines).
- Heterogeneity (variability): The complexity of a service determines its variability. The more a process can be automated, the more it can be standardised. From the customer’s point of view, total standardisation is not necessarily preferable. Branch staff could more individually react on the customer needs. Tailoring an appropriate service mix is the best customer care policy.
- Perishability: The degree of perishability depends on the type of financial service. Missing a certain clearing date can be time-critical, whereas fund reserves can be retained and be utilised later. Production and consumption of a service is often not simultaneous, e.g. long-term commitments for a savings plan or a loan. Therefore, financial services marketing should create awareness of long-term benefits and reduce cognitive dissonance in clients who might back out of a deal.

Further aspects of financial services are related to their four classic characteristics:

- Complexity/high involvement purchases: Customers face greater risk when acquiring complex financial services, as they are high involvement purchases. This means that the customer seeks around for best advice during a (longer) period, but it remains difficult for him to judge the potential, quality, or value of a service.
- High impact of brand loyalty: As customers often stay with the same financial service providers to satisfy their different needs during their life (lifetime concept), the institutions are keen to tie them early. However, higher competition and information transparency make dissatisfied customers change the provider. Besides, repeat sale of most financial products is rare or irregular. Therefore, customer retention is another important objective for financial service providers, e.g. by keeping regular contact through appropriate communication. Target group-oriented marketing (e.g. service differentiation) and advertising campaigns stress to create a strong brand loyalty.

3.4.3 B2B-Marketing in the Banking Industry

The classical thinking reflects B2C relationships when talking about marketing. In contrast, B2B marketing has its own rules, which have to be considered when assessing communication effects[30]. There is no assembly-line production of standardised products for an anonymous market, which amortise investments when selling high amounts of pieces (“economies of scale”). Instead, profit per single client counts in B2B banking, that is to say “every deal matters”.

In a B2B transaction a buying decision always has to be justified by an economic reasoning on behalf of the customer, i.e. the purchased product or service has to be profitable in the opinion of the customer[31]. Communicating useful capabilities of a delivered service is the key to increase a perceived service value (resp. profitability). This could even make the customer agreeing with paying a higher price.

In communications theory, Lasswell’s formula of corporate communication is an often discussed model of the real world.

Abbildung in dieser Leseprobe nicht enthalten

(Source: Follow. Nieschlag/Dichtl/Hörschgen (1997) cited Kühlmann et al. (2002), p. 196).

Fig. 16 : Lasswell-Formula of corporate communication.

This classical model demonstrates the general problem to capture and measure the reaction from the receiver (e.g. multiple communication channels). This becomes even more difficult in B2B banking. Since the highly abstract financial products are difficult to explain because of their individuality. In addition, B2B communication often means communication[32] with customers (e.g. financial executives). Such an individual relationship is very difficult to measure as well.

3.4.4 The Importance of Customer Satisfaction and Retention

Banking is a people-based service that entails the importance of customer satisfaction in financial services marketing. Hill and Alexander describe customer satisfaction as “a measure of how [an] organization’s total product performs in relation to a set of customer requirements. (…) Customer satisfaction measurement is therefore about measuring how customers perceive [one’s] performance as a supplier”[33]. In financial services marketing, the supplier performance results from his 8P-marketing mix (ref. to chapter 3.1). Therefore, this definition emphasises a direct link between customer satisfaction and financial services marketing[34].

Reinecke and Dittrich elect customer retention as the base for customer satisfaction (next to other things). For a better understanding, they categorise customer retention by types, potentials, and levels of retention (ref. to tabular overview).

Tab. 5: Types, potentials, and levels of customer retention.

Abbildung in dieser Leseprobe nicht enthalten

(Source: Own creation follow. Reinecke/Dittrich (2006), p. 316-320).

Their further analysis identifies three interdependent criteria of the customer retention mix[35]. These are the (…)

- strength of customer retention, defined as absolute extent of both perceived attractiveness and dependence;

- structure of customer retention, depending on the relation between attractiveness and dependence and depending on the relative reliance on a supplier; and

- stability of customer retention as degree of resistance against disturbing variables.

Abbildung in dieser Leseprobe nicht enthalten

(Source: Follow. Dittrich (2000), p.108).

Fig. 17 : Three criteria for an “optimal” customer retention.

Even if a given customer retention is already strong through high attractiveness or dependence (ref. to table item (I)), structure and stability are necessary to ensure a long-term customer relationship. This comprehensive framework is not examined in detail in this paper. However, it reflects the high complexity of many influencing factors of a customer relationship. Finally, an approach to a controlling cockpit for customer retention is outlined (ref. to figure below). The chart suggests controlling measures for the strength of customer retention on every level of a cause and effect chain. The structure and the stability of a customer retention are not considered.

Abbildung in dieser Leseprobe nicht enthalten

(Source: Follow. Dittrich (2000), p.198, translated from German).

Fig. 18 : Levels of controlling customer retention (with selected measures).

4 Communication Marketing Mix at WestLB AG

4.1 Overview of Communications Mix

The previous chapter introduced the basics of financial services marketing, which includes the promotional or communication mix. In this chapter, the reader will get an idea on how WestLB implements its communication mix in the sphere of B2B-marketing. The here discussed WestLB activities are marked in the chart below.

Abbildung in dieser Leseprobe nicht enthalten

(Source: Follow. Kühlmann et al. (2002), p. 201).

Fig. 19 : Overview of instruments of communication mix.

Typical promotional mix instruments for financial services are defined in the table below.

Tab. 6 : Definition of promotional tools (resp. communication mix).

Abbildung in dieser Leseprobe nicht enthalten

(Source: Follow. Harrison (2000), p. 217).


[1] WestLB ranks on the 9th position within the largest German financial institutions. Refer to tab. 1.

[2] Cf. WestLB (2007c).

[3] Cf. Boyle/Boyle (2001) for a detailed explanation of different derivates, certificates included.

[4] Cf. for further information.

[5] Cf. Naumann (1992), p. 16f.

[6] Kotler et al. (1999), p. 1004.

[7] Cf. Culliton (1948) cited Dannenberg/Wildschütz/Merkel (2003), p. 15.

[8] Cf. McCarthy (1960), pp. 41-50.

[9] Cf. Kotler et al. (2007), p. 740.

[10] Cf. Woodruffe (1995), p. 23.

[11] Cf. Magrath (1986) cited Meffert/Bruhn (2006), p. 388f.

[12] In literature, there exist further definitions of marketing mix. Becker (2007), p. 488, defines a marketing mix, which comprises three main instruments: supply, distribution, and communication.

[13] Cf. Janssen (2002), p. 307.

[14] Cf. Kotler/Keller (2006), p. 558.

[15] Kotler et al. (1999), p. 781.

[16] Grönroos (2007), p. 305.

[17] Cf. Woodruffe (1995), p. 19.

[18] Cf. Kotler et al. (1999), p. 646f.

[19] Cf. Bourne (2004), p. 117. The author describes this service characteristic as “simultaneous”.

[20] Cf. Woodruffe (1995), p. 19.

[21] Cf. Harvard Business School (2007).

[22] Cf. Kühlmann et al. (2002), p. 20f.

[23] Cf. Hilke (1989) cited Kühlmann et al. (2002), p. 21f.

[24] Cf. Berry/Parasuraman (1992), p. 19f.

[25] Cf. Gericke (2002), p. 160.

[26] Cf. Woodruffe (1995), p. 21f.

[27] Cf. Zeithaml (1981), pp. 186ff.

[28] Cf. Woodruffe (1995), p. 253ff.

[29] Cf. Pepels (2004), p. 942. He metaphorically speaks about “placebos“ which overcome intangibility.

[30] E.g. Gummesson (2002) distinguishes 30 types of relationships in his “total relationship marketing”. This new marketing approach focuses on the individual interaction within relationships or networks of relationships.

[31] Cf. Naumann (1992), p. 48. Cf. also Krauter/Kübler/Krauß (2003), p. 62.

[32] Cf. Merbold (1994), p. 46.

[33] Hill/Alexander (2000), p. 2. Cf. Raab/Unger (2004), p.407, for customer satisfaction measurement.

[34] Cf. Hill/Alexander (2000), p. 30f.

[35] Cf. Reinecke/Dittrich (2006), pp. 322-327.


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FOM Essen, Hochschule für Oekonomie & Management gemeinnützige GmbH, Hochschulleitung Essen früher Fachhochschule – Wirtschaftswissenschaften, Business Administration
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Titel: An Approach to an Accountable Client-Communication Mix in the Banking Industry