Analysis and Planning HSBC

Published Date: 23 Mar 2015

The background of the HSBC Group in India can be sketched back to October 1853 when the Mercantile Bank of India, London and China was founded in Mumbai. With the authorised capital of INR 5 million, the mercantile bank opened branches in Chennai, London, Colombo and Kandy. By 1855, the bank expanded operations in Kolkata, Canton, Singapore, Hong Kong and Shanghai.

HSBC has an international network comprising nearly 8500 offices serving over 125 million clients in 86 countries. The HSBC Group is committed to the five core business principles of outstanding customer service: effective and efficient operations, strong capital and liquidity, prudent lending policy and strict expense discipline.

"The HSBC Group serves around 100 million customers worldwide through around 8,000 offices in 87 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. With assets of some USD 2,418 billion at 30 June 2010, HSBC is one of the world's largest banking and financial services organisation. HSBC is marketed worldwide as - the world's local bank".

http://www.hsbc.co.in/1/2/miscellaneous/about-hsbc

2.1 Mission Statement

"Through the 1990s, HSBC has vigorously developed its role as one of the leading banking and financial services organisations in the world. Its strategy of 'managing for value' emphasises the Group's unique balance of business and earnings between older, mature economies and faster-growing emerging markets.

HSBC in India is proud to have retained the Group's pioneering streak by being an active partner in the development of the Indian banking industry - even giving India its first ATM way back in 1987. The organisation's adaptability, resilience and commitment to its customers have further enabled it to survive through turbulent times and prosper through good times over the past 150 years."

3.1 The market segment of HSBC credit card and its competitor

HSBC isolates the various broad segments within the market and follows segment marketing. The company divides the market on the basis of creditability. It offers several card types to different market segment performing clustered preferences.

The below mentioned variables have been used by the organisation in determining the segment of the consumer market:

Geographic - The consumer market has been classified on the grounds of different geographical units i.e. states, cities and regions. The company decides to offer the product in the market as a whole but pay attention to the urban and sub-urban market's needs and preferences.

Demographic - This is one of the most important aspects for distinguishing the customer groups. As the consumer needs and wants are often associated with demographic variables; HSBC divides the market on the basis of their income and the purchasing power, occupation, education and social class. Increasing instances of Double Incomes in most families coupled with the rise in spending power.

Psychographic - Buyer under the common demographic group may have different psychographic profiles bases personality and lifestyle. HSBC and Westside offer the HSBC Westside Credit Card, a card that is designed to complement the lifestyle and also serves as a symbol of recognition and status, across the globe.

Behavioural - The consumer market has further been segmented on the basis of the buyer's attitude, knowledge, usage and response to the product. The consumer group in the same segment may require the product for different benefits associated with the product. Hence, HSBC has designed its credit card used for the common purpose with different benefits for different consumers. (Will be elaborated taking into consideration the user status, usage rate, buyer-readiness, attitude and loyalty status).

HSBC does not focus on the quantity rather the main concentration is to target the quality customers in the market. HSBC amalgamates its customer base, while amplifying revenue from within the existing customers (PLB, AIQ, PFS) by increasing their card-spends first - rather than scouting for newer ones. The organisation has an appetite for new cardholders, but not at the expense of non-performing assets (NPA). They have gone for aggressive clean-up operation on credit card portfolios resulting in a positive impact with issuers returning to the growth path. Here is the proof: the latest Reserve Bank of India (RBI) data shows the number of new cards issued in April this year was a million higher than the inactive and loss-making accounts culled.

Furthermore, HSBC targets the Westside store shoppers covering the entire age group in the market. Increased urbanisation has led to higher customer density areas thus enabling Westside to use lesser number of stores to target the same number of customers. Aggregation of demand that occurs due to urbanization helps a retailer in reaping the economies of scale. The consumers are in the middle to high range income groups as the products in the store are priced moderately. HSBC Credit card operations, which keep a hawk's eye on demographics, are swooping down on young shopaholic consumers through the cobrand association with the Westside store. 

Major Competitors

Citibank Credit Card

Standard Chartered Credit Card

SBI Credit Card

ICICI Credit Card

Axis Bank Credit Card

HSBC has a competitive advantage over its competitors as the bank engages in offering better, cheaper and newer products and services. It incorporates the customer-benefit approach and product-class approach in order to position the product over its competitors in the market. The organisation's attitude for betterment outperforms its rivals in the open market operation. The bank focuses on operational excellence, customer intimacy and product leadership to enhance its market position over its industry rivals. HSBC differentiates its market offer from the competitors' basis four basic dimensions:

Product Differentiation

The HSBC credit card provides special features like fuel surcharge waiver and exclusive rewards programme. The petrol fuel surcharge waiver is an elite feature on HSBC credit card which undermines the similar product offered by the market competitors. The rewards programme endeavours the buyer with the reward points on every shop that can be redeemed for annual fees, gifts, gift vouchers, charities and JPmiles to the Jet privilege account. HSBC Westside Co-branded card is packed with benefits from both the HSBC and Westside. The same offers privileges and superior savings for a memorable shopping experience unlike its competitors.

The HSBC credit card is globally accepted at over 18 million establishments worldwide and over 1 lakh establishments in India. The card has access to cash, round the clock, at over 700000 ATMs worldwide. HSBC endeavours password protected payment facility on the Internet at no additional cost. Also the card comes with the zero lost card liability after the loss of card has been reported to the HSBC. In case of any damage, the card is replaced by the bank and the new card is dispatched to the cardholder's mailing address within 5 working days.

HSBC credit cards are among the most popular and top-rated credit cards in India. The range of credit cards is available in the market depending on the spending style of an individual. (n.a - look again for look and style of the card)

Service Differentiation

The card is dispatched to the consumer through its official courier service provider - "Blue dart" which ensures security, accuracy and speed in the delivery process. The customer is provided with the full usage and service guide along with the credit card to safeguard consumer from any misuse. HSBC's international connectivity gives it competitive advantage over the similar product available in the market. The post-sale service is an integral aspect that a consumer looks for before buying that product. HSBC's preamble is to ensure that the customer get the best of service. The cardholder may contact the customer service channels i.e. phone banking service, Email or visit the nearest HSBC branch for any probes. The quality of service offered by HSBC provides a brink to the market position of the credit card over the industry rivals in the market.

Image Differentiation

An established brand name is the result of HSBC's continuous identity building programs and service excellence. The logo of the bank signifies that the doors of the Hongkong and Shanghai Banking Corporation are open for business. The symbol of hexagon representing the six quadrants has an instant recognition and bagged a distinct place in the target customer's mind. The same has also worked into brand advertisements in conveying the company personality.

The bank's focus is to create a professional and elegant unified ambience across establishments. There is an exclusive Premier Service desk in selected branches to ensure extra comfort and convenience for its valued customer. HSBC has always believed in playing an active role in the community it serves. At HSBC, corporate sustainability is not mere magnanimity. It takes its Corporate Sustainability (CS) role seriously and hopes to help create an environment where business and nature can flourish hand in hand.

"Its MicroFinance lending initiative launched in April 2005 has already benefited almost 9000 poor households in Andhra Pradesh - giving them the hope of a sustainable livelihood".

http://www.superbrandsindia.com/images/brand_pdf/consumer_3rd_edition/hsbc.pdf

Majorly, all the banks offer the similar offers and features in the product though; it is the HSBC's brand name that creates a difference.

Personnel Differentiation

HSBC has a strong competitive advantage through hiring and training the better individual that its competitors do.

4.1 Marketing Mix Developed by HSBC Supports Its Market Position for Credit Card

HSBC's devises the marketing activities and instils the marketing-mix strategies to influence its business partners along with the prospect consumer. Marketing activities are aimed to create awareness, communication and deliver value to the consumer. HSBC views email marketing as a vital component of their overall marketing mix, enabling them to communicate with their customers in a highly targeted way.

4.2 Product

The product is an integral aspect of the firm's marketing strategy. Products that do not produce value for consumers are certain to fail irrespective of the marketing strategies implemented. The bank offers different product types for every consumer with different needs and wants. It started operations in the country with the generic plastic cards targeting all consumer groups.

4.2.1 Core Product

The customer is entitled to 52 days free credit period for repayment of purchases. Cashless facility, 52 days credit period, cash advance

4.2.2 Actual Product

The HSBC credit card types currently in the market are as follows:

HSBC Classic credit card

HSBC Gold credit card

HSBC Platinum credit card

HSBC Premier credit card

HSBC Westside Cobrand Classic credit card

HSBC Westside Cobrand Gold credit card

With the HSBC Credit Card the consumer can avail the Balance Transfer feature which allows them to transfer other credit card outstanding dues for repayment at lower interest rates. Furthermore, the HSBC credit card comes with the 'Loan on Phone' facility to convert the purchase into easy instalments. The bank has also cobrand association with (CPP Assistance Services Private Limited.) to safeguard the cardholder's interest in event of card loss, theft and related fraud. The CPP (Card Protection Plan) shields the loss of important cards & valuable documents including the other credit, debit, ATM, membership or loyalty cards. HSBC also provides credit card re-payment cheque pick-up facility for its credit cardholders. The facility is presently offered in Bangalore, Delhi, Mumbai, Hyderabad and Chennai.

4.2.3 Augmented Product

4.3 Price

The HSBC credit card has been priced high compared to the most of the competitors in the market. The consumer does not hesitate to opt for the card at offered price considering the fact the brand name and the additional features of the product. The bank charges annual fee towards the card usage which is levied to the cardholder's account in the anniversary month and a joining fee on some card types that is levied at point of sale.

As a part of promotion, the bank offers card with no joining fee and cards free from annual fee for life to select customers. The bank may offer 50% discount on the fee bases the creditability of the prospect and the existing customer.

4.4 Place

The enormous International presence of the bank ascertains to be a marketing advantage. It endeavours ease of access to bank services to the cardholder even on an International travel.

Channels

Coverage

Assortments

Locations

Inventory

Transport

4.5 Promotion

HSBC focuses on establishing sound communication with the consumer and implement Direct Marketing strategies. The bank advertises the credit card through various marketing means like Email, hoardings, brochures and cobranding. The bank also attempts to create a positive image of the product to ensure word of mouth strategy works for the product. The Westside association has proved propitious for the bank in conquering the target market base. The card is being majorly marketed by cobranding with other business partners in form of discounts on renowned products and services to existing customers. HSBC also centres on increasing usage on the existing cards in the market along with the sale of new cards. From time to time, the bank launches the cash back scheme on card usage or on purchases with associated business partners to retain the existing cardholders and lure the prospect. E.g. the bank is offering 5% -10% cash back on purchase with the merchant "MakeMyTrip (India) Pvt. Ltd." (Travel agency) using HSBC credit card.

5.1 Marketing Mix implemented by HSBC influences Buying Behaviour for its Credit Card

The product has been designed as per the market requirement and caters to the needs and wants of every individual with different product types being offered for every target segment. As the product is one time buy and is long-term association, the consumer engages in complex buying behaviour. The basic core product is identical to the similar product being offered by the industry rivals. However, the distinct product type and additional exclusive features associated with HSBC credit card allures the esteem-seekers who look for class, brand and snootiness.

In spite of increased interest rate and annual fee levied to the card account the demand for credit cards is rising. Hence, the pricing strategy opted by HSBC has been quite successful to attract the target consumer who associate the product with prestige and reputation. Some consumer may not look for product attributes, brand image and additional benefits associated with the product. The bank might fail to allure the consumers who looks for cost benefit and whose interest is only in the cashless purchase and credit facility. However, the bank should offer a card type without any joining or annual fee with the core product benefit for whole market coverage.

AS the HSBC's tagline goes "the World's Local Bank" the bank ensures the same substantiates to be true with its massive presence in the country and worldwide. It provides ease of access to the consumers unlike any of the competitors in the Indian market.

HSBC engages in personalized promotion to communicate through Email to the existing bank customers (Personal Banking).

Brand loyalty,

Never underestimates the importance of local knowledge

Product - c needs & wants

Cost to customer

Place - convenience

Promo - communication