Write TWO PAGES TO BE ADDED TO THE FOLLOWING TEXT and at the end of the two pages conclusion 1.1 Strategic Marketing The banking industry today comprises of a number of financial institutions including credit unions. As described by Tiemey (2007) the market has been shrinking over the past 10+ years due to extensive M&A activity, with small and medium size institutions being absorbed by larger entities. A popular definition of bank marketing is given by S. Kuppuswami (1986) in the following words, \”Creation and delivery of financial services suitable to meet the customer\’s need at a profit to the bank\”. This definition as described by the author recognizes the imperative need to satisfy customers, and the importance of both the creation and delivery aspects of bank services and underlying profit motive. As described by Tiemey (2007) throughout the globe the market has become increasingly competitive due to ongoing deregulation and the proliferation of electronic communications channels. As a result banks now face stiff competition from large credit organizations, national and super-regional banks and cooperative banks with extensive branch and ATM networks and some more specifically in the USA internet-only banks. The banking sector has also been undergoing a period of consolidation, and it looks like more to come. (Jagersma, 2006) Throughout Europe continuing regulatory and technological changes have affected the banking sector. According to Tiemey (2007) increasing regulatory oversight onprivacy and anti-money laundering have required banks to invest more heavily in security and compliance and has resulted in risk management software and service providers. Migration to electronic payments has eliminated traditional geographic barriers and has reduced operations expense and created new sources of fee revenue. Many banks have developed mobile devices since they know that are the preferred channels to reach young consumers. It definitely provides speed and efficiency in banking operations and consequently customer satisfaction. The banking industry is operating in a dynamic environment and organizations that want to increase their market share must stay ahead of competition and move quickly to capitalize on emerging opportunities. When it comes to their marketing strategy the banking industry is like any other industry. Branding, positioning and creating a competitive advantage are equally important in the development of a Marketing Strategy. More specifically the fundamentals of successful market positioning rely on the following factors: ? The brand name and image should represent what the market perceives it to be ? A bank cannot claim a position that is already occupied ? Service isn’t your differentiator – it’s your innovation ? It’s more profitable to be a big fish in a small pond than a small fish in a big pond Needless to say, the banking industry is both extremely crowded and rapidly evolving. There is definitely a major question on how banking institutions can apply these fundamentals profitably within the banking market, which in addition, is challenged by the emergence of commodity banking, the risk of specialization and the cost of innovation as stressed by Knowles (2007). Therefore, a banker must identify a marketing strategy that will provide its organization with the greatest likelihood of success, based on the following factors: ? Community demographic and economic characteristics ? Competitive environment ? Technology infrastructure ? Availability of skilled personnel Lion’s Share Consulting Group gives the example of Ridgewood Savings Bank in New York in its website. “Ridgewood’s demographic research indicated many of its customers were now living in retirement villages making travel to the bank’s branches more difficult. Ridgewood addressed this changing demographic by introducing their Mobile Banking Center, a specially designed vehicle equipped with teller windows, ATM, private office, customer service desk, and wheelchair access. Ridgewood personnel drive the branch-on-wheels to various retirement communities on a regularly scheduled basis.” Chuck Knowles, 2007,page 2 To develop such a customer oriented strategy required a major investment on the behalf of the bank. This initiative however did not only preserve an important segment of Ridgewood’s customer base, but it actually earned the bank positive press and recognition from the New York Banking Commission, and of course reinforced its position as a community-focused bank. The key for any bank, like other successful organizations, is to develop a unique market strategy and to ensure that its investment in marketing and technology directly support the strategy (Knowles, 2007). No organization either in the product or service industry can succeed if it doesn’t aim on the following prerequisites. An effective marketing strategy is the foundation to success and it enables you to: ? Differentiate your organization from the competition ? Increase customer value ? Capitalize on specialty, underserved and emerging markets ? Assess and manage risk profitability Competitive advantage is difficult to create in the banking industry and it is even more difficult to sustain. Most banks offer almost identical services that can hardly be differentiated by the average client especially in the retail sector. According to Greisiger (2007) banks usually can’t achieve a cost advantage. Therefore that leaves differentiation as their primary method for creating competitive advantage. The big question here is: “Can banks easily differentiate from each other and if they can how?” One method of different ion is through technology. Technology is playing a bigger and bigger role in banking. On the other hand most banks are using functionally identical systems to develop and deliver products and services. This uniformity of technology has resulted in commoditized banking – the antithesis of differentiation.