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Product Innovation & Management

  1. 1. PRODUCT INNOVATION & MANAGEMENT FOR FINANCIAL INSTITUTIONS Presented by: Kevin Chetty Commercial Director
  2. 2. GAME 1
  4. 4. I WANT SBAF Private Card delivers the benefits & enhancements desired 12/10/29 the Private Bank Client by
  6. 6.  Topic  Presenter  Delegates  Workshop Ground Rules  Workshop Expectations & Objectives 6
  7. 7. AGENDA
  8. 8.  Day 1  Session 1: Stimulating the Innovative Creative Juices  Session 2: Competitor Analysis in a Competitive Environment  Session 3: Financial Analysis, Pricing Strategy & Risk Analysis  Session 4: Customer Segmentation  Session 5: Market Research
  9. 9. Developing a compelling product proposition forms the heart of any business strategy “Strategy is based on a differentiated customer value proposition, and satisfying your customers is the source of sustainable VALUE creation” Robert Norton & David Kaplan 9
  10. 10. WHAT IS INNOVATION? • The process by which an idea or invention is translated into a good or service for which people pay or something that results from this process • To be called an Innovation an idea must be replicable at an economical cost and must satisfy a specific need • 2 types of innovation: • Evolutionary Innovations: Brought about by gradual changes in technology or processes and have 2 types: • Continuous Evolutionary Innovations – result in alternations in a product or process characteristic instead of NEW product, e.g. Laptop computers, fluoride toothpaste • Dynamic Continuous Evolutionary Innovation – requires some user-learning, but does not disrupt his/her routine • Revolutionary Innovations: Require a good deal of user-learning, often disrupt routine, create new behaviours, e.g. Photocopier, personal computers, internet. Greater RISK taking, NEW Product, hence10 NEW markets
  12. 12. FATHER OF INNOVATION....? • “We used to dream about the stuff, know we get to build it, its pretty neat….” • “We are gambling on our vision, and we would rather do that than make ‘me to’ products……” • “Its more fun to be a ‘pirate’ than to join the navy……” • “And 1 more thing........” • “I think if you do something and its turning out pretty good, then you should go do something else wonderful, not dwell on it to long, just figure out what’s next..” 12
  13. 13. GAME 2
  14. 14. WHAT IS PRODUCT MANAGEMENT? It is a Systemic, holistic business management of products & Services MARKETING MARKETING FINANCE SALES IT/OPERATIONS 14
  16. 16. SESSION 1: Stimulating the Innovative Creative Juices
  17. 17. 1. Background YOUR CREATIVE FORCE: AN UNTAPPED POTENTIAL • I define Creative Force as the power to create that flows through all of us!!!!! • Some people, creativity is a rare skill, but in my experience we all can and have a creative being waiting to explode in each one of us….TAP INTO THIS AS A TEAM/GROUP • Creativity is NOT about games or play, it must be approached with respect – because it is a powerful thing – perhaps the most powerful thing • When you use your natural creative power to innovate in your own life or to bring innovations to the lives of others, you’re quite capable of changing our world 17
  18. 18. 1. Background LEADING WITH CREATIVE VISION • Defining an innovative goal to motivate your team • Exploring your leadership orientation and style • Building leadership experience • Setting the right tone for creativity • Creating an ‘Innovative Hub’ group • Setting ambitious goals • Leadership through Ethics & Innovation • Recognizing NEW ideas • Getting ongoing feedback from customers • Acknowledge mistakes/catastrophes 18
  19. 19. 1. Background THE CREATIVE THINKING PROCESS 19
  20. 20. 1. Background THE CREATIVE THINKING PROCESS 20
  22. 22. 1. Background NARROWING YOUR FOCUS TO FIND SOURCES OF CREATIVE ADVANTAGE PRODUCT • Innovate to offer a better product, design, technology, packaging or other related innovations • If you cannot afford to invest the next hot product, be on the look out for it, and become a reseller PRICING • Find ways to drive costs down and offer lower prices, or explore creative ideas to take some of the sting out of buying, such as by offering loyalty programs, layaway, innovative warranties etc PLACEMENT • Distribute your products in helpful new ways (via the Internet, Mobile Sales, Cell Phones, Social Media, etc • Distribution is the key easiest way to score a home run PROMOTION • Find clever, attention grabbing ways to communicate with buyers and build brand equity PEOPLE • Engage free help through social media by getting people to talk about your brand, product, service, etc 22
  23. 23. 1. Background BEING AN INNOVATIVE STRATEGIST • Expanding into new geographic regions • Pursuing new types of customers • Improving or adding to your product line • Introducing a new technology or invention • Partnering with one or more other organizations to something you cannot do yourself • Dramatically reducing your costs or turnaround time by innovating how you source or produce your products or services • Distributing in new ways to save money, time, increase market coverage or provide greater ease and availability of purchase • Updating or replacing your brand name with something more dynamic • Influencing strategy from bottom-up 23
  24. 24. 1. Background STRATEGIC INNOVATION CYCLE THAT DRIVES ORGANISATIONAL SUCCESS Efficient Production Growing Firm maximises production Profits Peak as Innovation Boost Market Saturates Profits Strategic Phase Profit Momentum Firm needs to shift to Firm shifts phase as it back innovation will it scales up to profit phase shift in time??? from invention Winning Innovation Identified Slowing Creative Searching 24
  25. 25. 1. Background TRACKING THE LIFE CYCLE OF A PRODUCT CATEGORY Creative Searching Until Market Saturates Again Sales & Competition gets Cutthroat Either Improvement revives Sales Market Begins Saturate Sales Gain ???? Momentum Or Some New Invention replaces product Innovative Product is Introduced Introduction Growth Maturity Decline - Revival Death 25
  26. 26. 1. Background AN INNOVATORS PORTFOLIO OF PRODUCTS High Maximise Update Profitability Develop Eliminate Low High Low 26
  27. 27. 1. Background MIND MAPPING (CRAFTING THE IDEA) IDEA 27
  28. 28. SESSION 2: Competitor Analysis in a Competitive Environment
  29. 29. 1. Background NEW PRODUCT DEVELOPMENT IN A COMPETITIVE ENVORONMENT • Managing NPD in a dynamic environment is a complex task • Using a competitor to make more informed decisions around NPD/Innovation • NEW product launch and later more ADVANCED • In a highly competitive market banks can adopt different technologies/products & use TIMING to mitigate the risk of price competition • Banks can invest in advanced technologies/products to influence a rivals choice – 1st to market • Must explore product flexibility, if NEW product fails, then resort to OLDER one • Introducing a NEW product in a any competitive industry is difficult • In competitive industries (financial services), product introduction timing is a function of external factors like market conditions and industry clock-speed • Timing is KEY or banks lose market share • SHOP the competition, COMPETITOR MATRIX 29
  30. 30. 1. Background NEW PRODUCT DEVELOPMENT IN A COMPETITIVE ENVORONMENT • It is important to understand the competitive market insights through ongoing research • Without market intelligence, it is challenging for banks to react appropriately and competitively • Leadership must understand that: • Market segments in which they operate • Every customer type (buyer, user, influencer, or decision maker) • Changing preferences of various customer types • Industry environment in which banks operate • Each and every competitor in the industry and how each product is positioned against each competitors product • Undertake some sort of PESTEL analysis, as this will provide impetus for strategic decision and spend on growth/products • Undertake a SWOT analysis of your products vs. the competitors 30
  33. 33. 1. Background COMPETITOR ANALYSIS TEMPLATE IMPORTANCE FACTOR MY BUSINESS STRENGTH WEAKNESS COMPETITOR A COMPETITOR B COMPETITOR C TO CUSTOMER Products Price Quality Selection Service Reliability Stability Expertise Company Reputation Location Appearance Sales Method Credit Policies Advertising Image 33
  34. 34. 1. Background COMPETITIVE PRODUCT EVALUATION • Competitive evaluations will help determine: • Products & costs in the market • Quality of products available • How to measure those products MOST COMPARABLE………BEST OF BRANDS………AVAILABILITY OF PRODUCTS……..PRODUCT SERVICES AVAILABLE……..COSTS OF PRODUCT/S 34
  35. 35. 1. Background COMPETITIVE POSITIONING 35
  36. 36. 1. Background COMPETITOR STRATEGY COST LEADER • Firms goal is lowest price • Source of cost advantage must be fully exploited • Above average performer on products DIFFERENTIATED • In differentiated strategy firms LEADER seek to be unique • It selects 1 or more attributes that buyers want and uniquely positions itself to meet this • Uniqueness attracts premium price FOCUS LEADER • Focus on narrow & competitive industry • Firm selects a segment or group of segments in industry and tailor makes solution 36
  38. 38. 1. Background RETAIL BANKING A REALITY The traditional retail bank is at an inflection point. The needs and expectations of customers are changing as quickly as the competition. Customers are demanding seamless, multi- channels, with better products and services. Simultaneously, other financial institutions and non-traditional players are looking for opportunities to invade this space or to redefine it through disruptive innovation. The result is forcing banks to examine a more balanced, integrated approach to product management and innovation, to ensure sustained growth 38
  40. 40. 1. Background THE CHANGING FACE OF BANKING In view of several developments in the 1990’s, the banking industry is changing … Global banking more competitive The IT revolution Information explosion Rationalisation of branches in 1990’s Banks are trying to become one-stop financial supermarkets How did banks respond? o Distribute more PRODUCTS & SERVICES through other ways and channels … o … proliferation of non-traditional banking channels
  41. 41. 1. Background A COMPETITIVE LANDSCAPE e.g SOUTH AFRICA Market landscape Banking environment Key macro econ trends Competitors becoming Macro economic increasingly aggressive environment outlook is Alliances and joint ventures moderate Customers Use a wide range of Regulation financial products Tier 2/3 legislation Proliferation of National Credit Act distribution Competition alternatives Commission Lower commission earnings
  42. 42. VIDEO: BANKING 2.0
  43. 43. 1. Background RAISING THE GAME IN RETAIL BANKING Booz Allen’s research shows there are clear opportunities to enhance revenue in retail banking. Going forward retail banks need to be INNOVATIVE, thro: o Provide dedicated channels (website, call centre, mobile sales forces and specialist areas in branches) for affluent customers. o Reduce waiting times in branches through the use of welcome desks (concierge concept) and the option of making appointments in advance. o Efficient call centre menus and staffing that enable customers to quickly reach people who can resolve their queries. o Enable customers to tailor websites, supported by strong security measures (e.g. random number generators). o Offer mobile sales advisers who can complete transactions at the meeting, for selected customer groups o Products that are understandable and easier to transact Source: Reference Booz/Allen/Hamilton - Striving for Growth, Best Practices in Retail Banking Sales and Service Channels 43
  44. 44. 1. Background THE 6 DYNAMICS CUSTOMER FOCUS In the EVOLUTION of retail banking channels, the 6 dynamics are critical to developing effective CUSTOMER FOCUSED strategies: • Branch generated revenue growth is becoming more challenging • Transaction processing and customer services are becoming increasingly independent of the branch channel • Customer demographics are shifting • New technologies are gaining widespread adoption, allowing customer relationship management to become channel independent • Changes in the regulatory environment are altering the playing fields • Banks must prepared for overlapping competition (Non-Banking Entities) •Innovative Products & Services from competitors
  45. 45. 1. Background WHAT DO CUSTOMERS WANT? NOT WHAT BANKS…… 45
  46. 46. SESSION 3: Financial, Pricing & Risk Analysis for New Products
  47. 47. 1. Background FINANCIAL ANALYSIS  Product performance and financial analysis, thereof is critical to make an informed decision/s  Historical data is key together with REAL market facts  Analysis of future scenarios is also KEY – FINANCIAL FORECASTS – short & long-term  About estimating sales volumes  About estimating direct and indirect costs  Ultimately the profitability  Ultimately the market share position of the product line/s  Must have product level overview of financial performance  Product Mangers must have complete accountability for the P/L of product/s  Product Managers must understand the financial implications to make informed decisions  Identify the most profitable and unprofitable customers  Understand the ‘Drivers’ of revenue performance  Use financial analysis to understand competitors 47
  48. 48. 1. Background FINANCIAL ANALYSIS: PRODUCT SALES ANALYSIS  Defined as, “ gathering, classifying, comparing and study of company sales data”  Sales analysis is a powerful tool  Major components of Sales Analysis:  How are sales defined  In what units can sales be analysed  In what category can sales data be placed  What are the appropriate standards in which sales can be compared?  Some of the Pitfalls:  IT systems are NOT designed by Product Managers  Financial Managers have different mindsets  Lack of understanding of all cost related to a product/s  Lack of understanding of proper financial forecasting  Predictive analysis  Lack of proper internal marketing by PM 48
  49. 49. 1. Background FINANCIAL ANALYSIS: AN EXAMPLE  Financial Model  Assumptions  Income of the Product  Direct Costs  Indirect Costs  5 Year Forecasts  NAV  ROI 49
  50. 50. 1. Background PRICING STRATEGY MUST FIND WAYS TO DRIVE DOWN COSTS AND OFFER LOWER PRICES OR EXPLORE CREATIVE WAYS TO ATTRACT, RETAIN AND GROW YOUR CUSTOMER BASE, E.G. OFFERING LOYALTY PROGRAMS, VALUE ADDED SERVICES, INNOVATIVE WARRANTIES Cost Based: • Fixed Costs PRICE FOR PROFIT • Cost plus mark-up • Still widely used • Makes it easier to predict profit margins Customer Focused: • Penetrating pricing, e.g. “Special Introductory Offer” • Used to encourage customers to switch to your product PRICE FOR RELATIONSHIP • Associated with marketing strategy to increase market share/sales volumes • Price skimming, charge high prices before competitor enters, e.g. LCD TV’s in early 2000’s Competitive Pricing: • Set price similar to competitors PRICE FOR DEFENDING YOUR POSITION • Differentiated strategy • How thro VAS 50
  51. 51. 1. Background RISK MANGEMENT  Innovation entails RISK at any point or juncture, so invest in R&D as part of business objective  If you are NOT innovate it is construed as putting your organization or business at risk  As a leader or manager you must be alert to the following:  Technological changes can blindside you so keep abreast of these changes in technology  Financial investments can turn into RISKY investments if a project/product proves to be too costly  Protect your idea or IP  Manage your business product line tightly  An attitude of being the BEST can be a RISK, as you become complacent and may drop the BALL on innovation or product lines 51
  52. 52. SESSION 4: Segmentation
  54. 54. OVERVIEW CHICKEN or THE EGG…  Chicken or the Egg scenario, which comes first Strategy or Segmentation?  Customer segmentation is the practice of dividing a customer base into groups of individuals that are similar in specific ways relevant to marketing, such as age, gender, interests, spending habits, and so on. Using segmentation allows banks to target groups effectively, and allocate marketing resources to best effect  Traditional segmentation focuses on identifying customer groups based on demographics and attributes such as attitude and psychological profiles  Value-based segmentation, on the other hand, looks at groups of customers in terms of the revenue they generate and the costs of establishing and maintaining relationships with them  Customer segmentation procedures include:  deciding what data will be collected and how it will be gathered;  collecting data and integrating data from various sources;  developing methods of data analysis for segmentation;  establishing effective communication among relevant business units (such as marketing and customer service) about the segmentation; and  implementing applications to effectively deal with the data and respond to the information it provides 54
  55. 55. SEGMENTATION GROUPS Preferred Downgrading Growth Pattern (Upgrading) 55
  56. 56. SEGMENTATION GROUPS - CORPORATE Preferred Downgrading Growth Pattern (Upgrading) 56
  57. 57. SEGMENTATION METHODS  Geographic variables  Demographic variables  Psychographic variables  Behavioral variables 57
  58. 58. SEGMENTATION CRITERIA - INDIVIDUALS Geographic Will Demographic Will Psychographic Will Behavioral Will a Variables ABC Variables ABC Variables ABC Variables bank use use use use them? them? them? them? Region Yes Age/DOB Yes Personality ?? Product use Yes Country Yes Gender Yes Lifestyle ?? Benefit sought Yes Density/Suburb Yes Income Yes Value ?? Loyalty Yes City/Town Yes Education Yes Social class ?? Credit use Yes Postal code Yes Family size Yes Interests Yes Occupation/Professi Yes Account bal. Yes on Nationality Yes Memberships Yes Religion Yes Risk profile Yes Language Yes Marital Status Yes Race Yes Residential status Yes 58
  59. 59. SEGMENTATION CRITERIA - CORPORATES Criteria Will ABC use the criteria? Number of employees Yes Industry Yes Location Yes Loan size (Use of credit facilities) Yes Balance sheet size Yes Company type (CC,Pvt) Yes Profitability ?? Turn over ?? 59
  60. 60. SEGMENTATION CODES/IDENTIFIERS Segment Primary segment Code Sub segment codes HNI/Affluent 100 101+ Rising Affluent 200 201+ Middle Class 300 301+ Large Corporates 400 401+ Small to Medium Enterprises 500 501+ Small Enterprises/Self 600 601+ Employed Professionals 60
  61. 61. CUSTOMER SEGMENTATION PROCESS STEP 4 STEP 5 STEP 6 STEP 1 STEP 2 STEP 3 Assess which group Assess per group Create Assess the value of Stratify or group Define the full of customers to of customers the segments of potential of the each customer customers based target based on unique attitude customers on their potential market potential size, or behavioral with the mix of usage potential revenue variables of same needs (Life Time Value) and customers values and share of voice wants How many Assess the relative •From where are the •Define the •Ego driven, $ Select the customers are importance of new customers characteristics of driven, convenience segmentation which there in the each customer in coming? (I.e. what each segment (e.g. driven, service most effectively defined market terms of either the is the referral average driven, scientific groups customers What (validate source) number of pattern / who refers? size/potential, key driven, etc... with the same needs questions customers or Based on what? purchasing factors, Your segmentation do I need usage •Identify in each ways should offer each : to answer •through sales stratus the new Life to influence •Measurability - the and what visits / Market Data Time Value of the decision making) size & purchasing do I need •What is the market customer •what is the size of power of the to do? we serve & who are •Which competitors each segment? segments must be all the customers are targeting these •Is it homogenous? measurable who may benefit same customers? •How do •Accessibility - it from our product? salespeople must be possible to Are we missing any interact with reach & serve the customers (I.e. customers in the segment those traditionally market and what •Substantiality - the served by our are the key market segments must be competitors)? drivers? large & profitable 61
  62. 62. CUSTOMER SEGMENTATION PROCESS STEP 7 STEP 8 STEP 9 STEP 10 STEP 11 Validate the selected Target the most Which product / Decide on product Develop for each segmentation attractive segments brand is being used positioning for customer in targeted approach based on potential by each customer in each of the segments a plan with size and potential target segments targeted segments an objective , tactics revenue (validate sources) and action plans. Consider •How easy will it be to · Check whether needs supporting convert customer in are being addressed evidence for your each segment segmentation segment to our • How to overcome products? the hurdles for using What Does the market •How responsive is our products ? questions really work the do I need way you have the segment to marketing actions? • Assess cost for each to answer segmented? action plan and decide and what •Are the most •What would be the whether it is feasible, do I need successful cost of serving the to target the segment to do? competitors taking segment? a different •How are the •Review regularly segmentation competitors targeting whether the needs approach? these customers? and wants are •What market data •Evaluate satisfied profitably do you need to attractiveness of each confirm current segment •Review regularly the segmentation? size of the segments, the needs and wants of each customer. 62
  63. 63. MANDATORY FIELDS - INDIVs Personal details  Title  Surname  Middle names  First name  Gender  Date of birth  Residential status  Home address  Home telephone number  Period at this address  Postal address  Country of residence  Nationality  Business Telephone  Cellphone number 63
  64. 64. MANDATORY FIELDS - INDIVs Personal details cont,  E mail address  ID number  Passport number  Expiry date  Driver’s licence number  Marital status  Number of dependents  Spouse’s name  Spouse’s employer and address  Preferred method of communication 64
  65. 65. MANDATORY FIELDS - INDIV Employment details  Current employer and address  Type of employment  Occupation/Profession  Occupation Title  Length at current employer  Monthly income  Method of payment  Banking details 65
  66. 66. MANDATORY FIELDS Previous employment details  Name of previous employer  Address of previous employer  Occupation title Next of kin  Address of next of kin  Relationship  Declaration  Signature and date 66
  67. 67. OPTIONAL FIELDS - INDIVs  Level of education  Family size  Religion  Home language  Race  Social memberships  Interests/hobbies  How did you come to know of ABC?  Consent for ABC and associate companies to market other products 67
  68. 68. MANDATORY FIELDS - CORPORATE  Company Name  Company address  Postal address  Telephone numbers  Nature of business  Contact person  Contact details (e mail,telephone,cell phone)  Designation of contact person  Company registration number  VAT registration number  Directors 68
  69. 69. SEGMENTATION MONITORING TOLLS  Assessment  Observation  Statistics 69
  70. 70. SEGMENTATION MATRIX Business line Retail Banking Corporate Banking Personal Private Profes- SME Financial Government Segment Companies Non Gov.Org Banking banking sionals Banking institutions Org Doctor Local Banks Churches Provinces Blue Main Dentist Micro Medium Foreign Embassies Regions (Mass) customer Pharmacist enterprises corporate Banks Trusts Towns Vets Leasing Donor Org Lawyer Silver Family Small Large Insurance Pvt Schools Cities Notary (Top Mass) Cluster enterprises corporate Micro Pvt Hospitals Other Finance Geologists Pension Sub Medium Pvt Gold Architects Multi Funds Gvt Hospitals Segment size Universities (Affluent) Engineers nationals Asset Mgrs Gvt Schools enterprises MBA Schools Accountants Building Auditors Gvt Societies Charitable Org Bus.& Fin. Universities Investment Civic Bodies Consultants Other Gvt Banks Other NGOs Orgs Other FIs. Sports- Persons Journalists 70
  71. 71. CATEGORIES Group Definition Child 0-12 years Youth 13-18 years Student 19-28 years Employees Any applicant who has an employment contract. Housewives Non working spouse Unemployed Unemployed (not self employed) Self employed Any applicant who generates their own income for survival XYZ employees Anyone employed by ABC Associated Company employees Employees of ABC sister companies Pensioners Former ABC employees who have retired Gvt employees Any persons employed by Government (Civil servants) Executives COOs, CEOs, CFOs, MDs, Executive Directors, GMs, FDs, MBA/MBL/DBL Any MBA/MBL/DBL graduate Professionals See list of professionals Politicians Any persons holding a position of authority within a Political Party (Full time) Pensioners Any person who has retired from formal employment and receives a pension. Civil Leaders Civil Society Leaders, e.g. Mayors, Councillors, Judges, Magistrates, Other 71
  72. 72. INDUSTRIES & SEGMENTS Real state Developers Estate Agents Prop.Mgrs Construction Prop.Inv.Cos NGOs Donors Churches Embassies Civic Groups Education Universities Colleges Schools Kindergartens MBA Schools Libraries Fin.Services Local Banks Foreign Banks Building Insurance Leasing Asset Managers Societies Traders Food Clothing Building Drugs Supermarkets Households Materials Agriculture Crop Farming Livestock Forestry Horticulture Grains and Fertilizer farming And Logging Oils seeds companies Mining Precious Quarry Mining Natural gas stones Media Publishing Media houses Advertising Broadcasters Houses Transport Car Fleet owners Car plants Storage Car hire Container Dealerships And Transport Leasing Tourism Hotels Lodges Airlines Travel agents Restaurants Safari Camps 72
  73. 73. SEGMENTATION CRITERIA – SME & CORP No of Loan size employees Turnover Sector if Segment Sub segment from up to from up to from up to applicable Micro enterprises $0 $10 000 0 10 $0 $40 000 Small enterprises $10 001 $100 000 11 25 $40 001 $400 000 Medium size SME enterprises $100 001 $250 000 26 100 $400 001 $1 000 000 Medium corporations $250 001 $500 000 101 250 $1 000 001 $2 000 000 Large corporations $500 001 $1 000 000 251 500 $2 000 001 $4 000 000 Corporate Multinationals $1 000 001 501 $4 000 001 73
  74. 74. SEGMENTATION CRITERIA – PERSONAL & PVT Income Liabilities Assets Group if Segment Sub segment from up to from up to from up to applicable Blue $0 $1 500 $0 $10 000 $0 $20 000 Personal banking Silver $1 501 $5 000 $10 001 $20 000 $20 001 $50 000 Gold $5 001 $20 000 $20 001 $100 000 $50 001 $200 000 Private Platinum $20 001 $40 000 $100 001 $500 000 $200 001 $1 000 000 banking Super Rich $40 001 $500 001 $1 000 001 74
  75. 75. CUSTOMER SEGMENTATION MODEL Entry Level Banking up to Retail Affluent Segment Wealth Absa retail acc R15m NIA customer base2 Private Bank R650 000 pa Retail Affluent RA R300 000 pa 290 969 Prof’s 63 400 New to bank customers Staff 49 629 R120 000 pa CMM 3.6m f af Se St M th n LS io u Core Middle Yo r s n/ Market Seniors io 1.32 m at Students R36 000 pa Students ti c 105 000 is ph Youth so 490 000 al Entry-level banking i nc ELB na 3.79m Fi New to bank customers GRCB Lead Generator Black diamonds Unbanked Conference, London, 18Lending Micro & 75 Note: 1 Source: Primary Bank Relationships – Amps ‘07 19 May 2008 2 Source: Absa Internal reflecting all relationships: Dec 2007
  76. 76. SESSION 5: Market Research Techniques
  77. 77. MARKET RESEARCH TECHNIQUES •Structured questionnaires • 1 to interviews • Structured • Telephone SURVEYS • Objective • Mail • Larger the sample the • Online better the results • Structured FOCUS GROUPS • Group setting • Focused discussions • Observations • Personal biasness PERSONAL INTERVIEWS • 1 to 1 • Less objective • “Real’ results FIELD TRIALS • New product • Help to modify product • Interact with segement/s 77
  79. 79. GAME 3
  80. 80. SESSION 6: Some Examples on Innovation and Product Development
  81. 81. MOBILE SALES CAPABILITIES & DEPLOYMENT Segmented Distribution Channel focus providing multiple options of delivery Entry Level Entry Level Workplace Banking Banks on Wheels Banking Banking Kiosks (BOW’s) External Sales Points Mobile Sales Units Focus: Worksites Focus: ELB and CMM (ESP’s) (MSU’s) Core Middle Market at Events, Worksites, Focus: Branch Hot Spots Focus: Townships Branch Support Comprises: Comprises: Comprises: Comprises: •Gazebo •Mercedes Sprinter •Large Kiosk •VW Crafter •Digital pens (2) •Gazebo •Generator •Generator •POS device •Generator •Remote opening kits (2) •Combination TV and Video (CET) •Tables (2) •Combination TV and Video (CET) •Digital pens (2) •PA System •Chairs (7) •Remote opening kits (2) •POS device •FBSS Workstations (2) •Marketing materials •Digital pens (2) •3G printer/Fax/Scanner •Fully functional ATM •Promotional materials •POS device •Marketing materials •Marketing materials •Card and Pin Mailers •Tables (2) and Chairs (7) •Promotional materials •Promotional materials •3 DSA’s per team •Marketing materials •4 FTE’s per BOW •Team Based Targets and •Promotional materials •Chairs and Umbrella’s Incentives •Training ATM •6 DSA’s per team Functionality: Functionality: Functionality: Functionality: •Account opening •Account opening •Account opening •Account opening •Basic Enquiries •Basic Enquiries •Basic Enquiries •Basic Enquiries •Mini Statements (future) •Mini Statements (future) •Mini Statements 81 •Mini Statements •Prepaid purchases (future) •Prepaid purchases (future) •Prepaid purchases •Prepaid purchases
  85. 85. TECHNOLOGY & ENABLEMENT Optimal technological enablement solution per segment Technology Solution Targeted Areas Status Medium Term View Digital • Entry Level Banking • LAUNCHED • Implement nationally Pens • ESPs • WPB Kiosks Laptop • Core Middle Market • LAUNCHED • Implement nationally Kits • Retail Affluent • Islamic Banking • Mobile Sales Units • Bank on Wheels Card and • All NBS sales • LAUNCHED • Full implementation Pin environments Mailer Other • Entry Level Banking • IT LITE SOLN • Introduce alternative devices Devices LAUNCHED Fulfilment • All NBS sales • INTEGRATION • Implement ED Portal environments
  86. 86. ENABLEMENT FULFILMENT PLATFORM Technological Integration ensure a seamless end to end Sales fulfilment process Note: Integrated Service – accessed by AGO, NBS Support hubs, other SBU’s and ES & WPB Sales Consultants
  87. 87. LARGE KIOSKS 87
  88. 88. SMALL KIOSKS 88
  89. 89. BANK IN A BOX 89
  90. 90. BANK IN A BOX 90
  92. 92. PRODUCT PROPOSITION: Model Defined CORE DETAIL DEFINITION Define the nuances of the target segment POSITIONING (Private, Gold, Silver) Price for profit, per segment, risk, and PRICING standardisation CUSTOMER NEEDS Positioning to the needs of Private, Gold, Silver PRODUCT DIFFERENTIATORS Key USP for each segment Key benefits distinctive to the segment (cascade DIRECT BENEFITS effect) DISTRIBUTION Channels and acquisition strategy Over and above the key benefits, e.g. through a VALUE ADDS country partner Products offered to spouses and immediate SECONDARY PRODUCTS family members
  93. 93. Private Bank Card Holder Prepared for Client Name Your name here Date
  94. 94. PRIVATE BANK CARD: THE POSITIONING WHO IS THE High Net worth Individual, earning... PRIVATE CLIENT ? Employed or Self Employed Well Informed & Networked Travels Locally & Internationally Ambitious and Focused Family Travels extensively Has Hobbies, e.g. Golf Technology Savvy 12/10/29
  95. 95. PRIVATE BANK: CUSTOMER NEEDS Offering the high-net worth I NEED POSITIONING individual a dedicated service and some exclusive benefits The transactions must be smooth and fast, and when I encounter a CONVENIENCE problem I want to reach someone to assist me 24 hours To be able to buy what I want, EMPOWERMENT where I want, as I travel the country and the world INTERNATIONAL Access to local and international Catered to the needs of TRAVEL lounges and boardrooms Private Bank Clients in Africa & Dedicated Private Bank DEDICATED Globally Relationship Manager to assist me SERVICE with my needs and problems To know that if something PROTECTION happens during my travels I’ll be protected 12/10/29
  96. 96. PRIVATE BANK: PRODUCT DIFFERENTIATORS EXCLUSIVE Full spectrum of the retail discounts and value adds offered through Value Choice BENEFITS and Other • 55 days interest free purchases • Access to credit 24/7/365 • International acceptance at ATM’s, POS CONVENIENCE and internet •24/7 customer service • Concierge services • Free POS purchases & secondary cards EMPOWERMENT • Minimum spend limit ******* • International acceptance • Priority Pass: Standard Plus benefit INTERNATIONAL embedded. Option to upgrade to Prestige at $150 per annum TRAVEL • Regus Lounge: Access to business facilities I WANT globally. Embedded value, $******** DEDICATED Private banking suite with dedicated SERVICE Relationship Manager Free lost card protection and travel XYZ Private Card delivers the insurance. Optional upgrade to benefits & enhancements desired PROTECTION comprehensive travel insurance. Free by the Private Bank Client insurance for Laptops, I-Pads
  97. 97. PRIVATE BANK: BENEFITS CORE CARD BENEFITS DETAIL Local lounge access C Priority Pass global lounge access O Visa Hotel Club Visa Luxury Hotel Collection C Viisa GO Explore C yQ C Exclusive books discounts in SA ONLY NC I WANT Regus Business lounge NC Visa Golf Access C Insurance for Laptops, I-Pads NC Travel Insurance* C Upgrade to Comprehensive Travel Insurance O Visa International Concierge Services O Free Lost card protection C Free secondary card/s C Embedded insurance for Indiv and family NC Pre-approved UPL’s Avis C SBAF Private Card delivers the Chic Retail Shopping C benefits & enhancements desired Macy’s Retail C by the Private Bank Client
  98. 98. PRIVATE BANK PRODUCT PROPOSITION Core Product Features Product Delivery model • Free Laptop & I-pad insurance • POS • Priority Pass The Private Bank • Dedicated Private Bank suites • Regus business lounge • Visa Hotel Club Credit Card • Local country branches • Call centre • Visa Luxury Hotels • ATM’s, Internet • Visa GO Explore • YQ • Visa Golf Access • Travel Insurance Value-added Services • Avis • Chic Retail Shopping • Free SMS notification • Macy’s retail discounts • 55 day interest FREE • Access to credit 24/7/365 • International acceptance at ATM’s, POS, Internet • Free POS purchases Segment • FREE secondary cards • Free lost card protection and travel • Private Bank Salaried or Self- XYZ Private Card Employed Customers delivers the • Earning between……… Regus Business Lounge benefits & enhancements desired • Global access to business offices, lounges by the Private Bank • Safe and convenient to do business Benefits to the Private Bank • Professionally positioned and well equipped Customer Client • Latest infrastructure • A single internationally accepted plastic • Take your business office internationally (top of wallet) • Provides additional value, utility and flexibility to retailer customers • Convenience and confidence in universal acceptance of credit card payment and financing mechanism • Additional value through partners
  99. 99. CARD MATRIX: BENEFITS SB CORE CARD BENEFITS PRIVATE GOLD SILVER Local lounge access C C Priority Pass global lounge access O O Visa Hotel Club C Visa Luxury Hotel Collection C C Viisa GO Explore C C C yQ C C Exclusive books discounts in SA ONLY NC NC Regus Business lounge NC O I WANT Visa Golf Access C O Insurance for Laptops, I-Pads NC C Travel Insurance* C C Upgrade to Comprehensive Travel Insurance O O Visa International Concierge Services O Free Lost card protection C C C Free secondary card/s C C C Embedded insurance for Indiv and family NC NC C Pre-approved UPL’s NC Avis C C C Chic Retail Shopping C Macy’s Retail C C C
  100. 100. VISA CARD MATRIX: BENEFITS PREMIUM PRODUCTS CORE CARD ENHANCEMENTS & INSURANCES CLASSIC/SILVER GOLD PLATINUM INFINITE Global Cardholder Assistance Service (GCAS) C C C C Medical and Legal Referral C C C Purchase Protection C C Extended Warranty C C I WANT Crisis Response C Multi-trip Comprehensive Travel Insurance C Loss of Baggage C Personal Accident C Trip Cancellation C Evacuation and Repatriation C Travel / Baggage Delay C *Coverage varies by product. C = Core Card Offering E-Exclusive, S-Selected, L-Limited 12/10/29
  101. 101. VISA CARD MATRIX: BENEFITS PREMIUM PRODUCTS CORE CARD BENEFITS* CLASSIC/SILVER GOLD PLATINUM INFINITE Global Merchant Offer Program C C C C Visa HotelClub C C C C Visa Golf Access C C Visa Airport yQ (meet and assist service) O O Visa Luxury Hotel Collection C C Visa Private Villas C I WANT C Visa Escapes C C Visa Airport Lounge Access O O Visa Concierge C Visa Golf Access (free golf benefit) C Visa Ticket Exchange C *Coverage varies by product. C = Core Card Benefit O = Optional Value Added Benefit with Issuer and/or Cardholder Fee
  102. 102. Visa Infinite Card Prepared for Client Name Your name here Date
  103. 103. INFINITIE CARD: The Positioning WHO IS THE High-net worth individuals INFINITIE CLIENT ? $1 million under asset management Well Informed, older, self made Travels Locally & Internationally Ambitious and very successful Family or Single Has Hobbies, e.g. Golf Technology Savvy Not easily swayed by luxury brands
  104. 104. INFINITE CARD: Customer Needs Key points The Customer Service the ‘HNI” segment with Need I NEED POSITIONING bespoke service and exclusive benefits The transactions must be smooth and fast, and when I have a CONVENIENCE problem I want to reach someone who will be on my side To be able to buy what I want, EMPOWERMENT where I want around the globe INTERNATIONAL Access to local and international TRAVEL lounges and boardrooms Catered to the needs of the Infinite Card in Africa & Recognition of my value as a Globally PRESTIGE & customer with personal service. EXCLUSIVITY Invite me to exclusive events. Help me enjoy my life with luxury To know that if something PROTECTION happens during my travels I’ll be protected 12/10/29
  105. 105. INFINITE CARD: Product Differentiators SBAF may choose to offer rewards to the REWARDS I WANT infinite cardholder • International lounge access • Dispute resolution CONVENIENCE • Lower referral and higher authorisation • 24/7 customer service • Minimum spend limit $20, 000 • No preset spending limiit EMPOWERMENT • International acceptance • Year-end summary INTERNATIONAL • Embedded lounge access • Regus Lounge: Access to business facilities TRAVEL globally. Embedded value, $******** At a dedicated country branch and via the call SERVICE centre 24/7 Travel accident insurance US$1,000,000 Comprehensive travel insurance benefits Infinite Card delivers the Emergency evacuation and repatriation benefits & enhancements desired PROTECTION Travel and emergency assistance services by the High-net worth Segment Purchase security Client Emergency card replacement/cash disbursements
  106. 106. INFINITE CARD: Benefits Key points Core Benefits INFINITIE CARD BENEFITS DETAIL Global Merchant offer program  Visa Hotelclub  Visa Golf Acces  Visa Airport yQ (meet and assist service)  Visa Luxury Hotel Collection I WANT  Visa Private Villas  Visa Escapes  Visa Airport Lounge Access  Visa Concierge  Visa Golf Access (free golf benefit)  Visa Diamond Air  Visa Ticket Exchange  SBAF Private Card delivers the benefits & enhancements desired 12/10/29 the Private Bank Client by
  107. 107. INFINITE CARD: INSURANCE BENEFITS INFINITI CARD BENEFITS DETAIL Global Cardholder Assistance Service  Medical and Legal Referral  Purchase Protection  Extended Luxury  Crisis Response I WANT  Multi-Trip Comprehensive Insurance  • Loss of Baggage  • Personal Accident  • Trip Cancellation  • Evacuation & Repatriation  • Travel/Baggage Delay  SBAF Private Card delivers the benefits & enhancements desired by the Private Bank Client
  108. 108. INFINITE CARD: INSURANCE BENEFITS I WANT SBAF Private Card delivers the benefits & enhancements desired by the Private Bank Client
  109. 109. INFINITE CARD PRODUCT PROPOSITION Core Product Features The Infinite Credit Card Delivery Model • Global merchant program • Dedicated wealth managers • Visa Hotelclub • Visa golf access • Visa yQ • Visa luxury hotel collection • Visa private villas • Visa escapes • Visa airport lounge access • Visa Concierge Services • Free golf benefits • Visa Diamond air • Visa accredited and related programs • Visa ticket exchange • Hilton Hotels gold membership • Harrods black reward card (10% discount, coffee, free alterations) • yQ Meet & Greet Segment • Diamond Air International • Exclusive South African Benefits • High netwoth individuals with Infinite Card delivers the asset under management of $1 benefits & enhancements million Regus desired by the Client • Unlimited Global access to business offices, lounges • Safe and convenient to do business Benefits to the Infinite Segment • Professionally positioned and well equipped Customer • Latest infrastructure • Exclusive and bespoke • Take your business office internationally benefits/service • Prestige and exclusivity • Convenience • Unlimited access • Excellent travel insurance/s
  110. 110. CREDIT CARD: DELIVERY & CHANNELS CHANNELS PRIVATE GOLD SILVER INFINITE Country Branch Network    Private Bank Branches  Branch Relationship Managers   Private Relationship Managers  High Network Portfolio/Managers  Visa Platform   Kiosks    I WANT ATM’s    Call Centre    Client Appreciation Events    POS     In-Country Partners  Direct Sales Agents  Internet Services     Cell-phone Banking     Interactive TV   Work Place Banking    Global Partners 
  111. 111. CORPORATE CARD PRODUCT PROPOSITION Core Product Features The Corporate Card Delivery Model • Comprehensive Global Insurance • SBAF supported through AMEX Globally • One Account • Branches • One Settlement • Corporate Relationship Managers • Currency of choice to purchase and settle • Complimentary Rewards Progam • Retail Discounts • Technology Discounts Services • Access to Proffered Hotels • Access to International Airlines Segment • Corporate clients with more than The Corporate Card 50 employees delivers the Other benefits & enhancements desired • by the Client Benefits to the Corporate Customer • Exclusive and bespoke benefits/service • Recognition & Rewards • Convenience • Unlimited access • Excellent travel insurance/s
  113. 113.  Day 2  Session 1: New Product Development Process  Session 2: Case Study: Creating the Best Product /Service for Business  Session 3: Packaging the New Product  Session 4: Case Study of Product Launch  Session 5: Product Lifecycle and Prolonging the Products Lifecycle  Session 6: Innovation & ‘Ethic’
  114. 114. 114
  115. 115. VIDEO: BMW ADVERT
  116. 116. SESSION 1: New Product Development Process
  117. 117. 1. Background NEW PRODUCT DEVELOPMENT PROCESS • Firstly, introducing NEW products is critical to the success of any organization and including Banks • Product Managers should follow a set process when implementing NEW products • The 7 step process will comprise the KEY elements of new product development • These steps are crucial to help make informed decisions • The process also shows the importance of market research plays in developing and shaping NEW product development 117
  118. 118. 1. Background PRODUCT DEVELOPMENT PROCESS STEPS 1-3 STEP 1: THE IDEA GENERATION • Requiring the gathering of ideas to be evaluated as potential product options • Must be an ongoing process with contributions from internal & external sources • Many market research are used to gather ideas, e.g. focus groups, channel members, Banks sales staff, customer comments, etc • Gaining insight on competitor products through secondary data sources • One important research technique used to generate ideas is brain storming where creative thinkers from inside and outside share ideas • Remember it is important to table many ideas as this will SPARK THE IDEA • Also use Mind-Mapping to set out product development STEP 2: SCREENING • Ideas generated are evaluated against feasibility • Screening can be done in hierarchal rounds involving the CEO, CFO, COO etc, on the feasibility of NEW product • Detailed screening will be followed through advanced research techniques • Once an idea/s are tabled, do a ROUGH ESTIMATE on SALES, COSTS, PROFIT, MARKET SHARE, CUSTOMER NUMBERS • Once an idea is accepted move onto step 3 118
  119. 119. 1. Background PRODUCT DEVELOPMENT PROCESS STEPS 1-3 STEP 3: THE IDEA GENERATION • Focus groups are convened where the product idea is presented to a group in the form of a CONCEPT BOARD PRESENTATION (i.e. story board) • EG, customers are shown the concept board depicting drawings of the product idea or can present a mock-up version that is NOT functional • Here you must get feedback from the customer segment on the likes and dislikes of the product in terms of the PRICE, PACKAGING, FEATURES, EASE OF USE, etc • IOW, you want feedback if the customer will buy the product and frequency thereof 119
  120. 120. 1. Background PRODUCT DEVELOPMENT PROCESS STEPS 4-5 STEP 4: THE IDEA GENERATION • At this stage the product idea has been narrowed down to 1-2-3 etc • More important is market research as efforts are made to analyze viability of product idea • Key objective, to obtain useful forecasts of market size, costs, sales volumes, financial projections, etc • Key objective to ascertain if overall product fits into the companies overall mission/vision (balanced scorecard) • Emphasis on external research, surveys, secondary research, competitor analysis • Emphasis on internal research, historical data, customer data, segment data STEP 5: PRODUCTION & MARKETING MIX DEVELOPMENT • Initial prototype of the product emerges • Start developing the marketing mix strategy, 4P’s • Get feedback/insight from customers as they will have a ‘live’ product • Customer feedback will help refine product and marketing mix before launch • Refine the marketing mix • Yippeeeee…FINALLY…..WE LAUNCH…..4/3/2/1… 120
  121. 121. 1. Background PRODUCT DEVELOPMENT PROCESS STEPS 6-7 STEP 6: MARKET TESTING • Can go straight to commercialization or • Restrict the launch to a smaller geographical area & target segment • Many ways: • Simulation • Build a live test site STEP 7: COMMERCIALISATION • Launch to a wider audience • Roll-out strategy • Phased approach so as to ensure production is controlled and relevant changes to the marketing mix 121
  122. 122. SESSION 2: Case Study: Creating The Best Product/Service for Business
  123. 123. 1. Background SOME CASE STUDIES CASE STUDIES: 1. Case Study 1 2. Case Study 2 3. Case Study 3 123
  124. 124. SESSION 3: Packaging the NEW Product
  125. 125. 1. Background PACKAGING THE NEW PRODUCT: THE LAUNCH • So we have done our homework through the Product Development Process • NOTE: Many NEW products are launched daily, so competition out there is stiff!!!! • So think carefully of your LAUNCH STRATEGY: Study the Competitors • Look at the competitors, SWOT analysis • Review their marketing strategy • List the banks that offer the product or service • Put yourself in the customer shoes…ask questions, WHY choose your product????? • What will attract the customer to take up the product or service???? • Evaluate HOW your product will stand out from the competition, WHAT WILL YOUR PRODUCT UNIQUE 125

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