Marketing Strategy For Retail Islamic Banking

Transcription

1 Market Strategy for Retail Islamic Banking By: - Zia Ahmed zia@ziaahmed.org zia@ziaahmed.org Page 1 of 14

2 INDEX 1. Target Market Evaluating the market segments Selecting the market segment Targeting strategy Branch Personnel Account Holder Small Business Enterprises Need Assessment of My Customers Personnel Account Holder Small Business Enterprise Competition in the Market Investment Scheme Investment deposits Direct Investment International Investment Department (IID) International Real Estate Treasury Department zia@ziaahmed.org Page 2 of 14

3 I will develop my strategy on the following points. 1. Target Market 2. Market Segment Analysis 3. Needs and requirement of target market and their potential 4. Product available in market and competition in market 5. Products, their profile and target market. 1. Target Market Target Marketing involves breaking a market into segments and then concentrating marketing efforts on one or a few key segments. Target marketing can be the key to a business s success. The beauty of target marketing is that it makes the promotion, pricing and distribution of your products and/or services easier and more cost-effective. Target marketing provides a focus to all of your marketing activities. While market segmentation can be done in many ways, depending on how you want to slice up the pie, three of the most common types are: Geographic segmentation based on location such as home addresses; Demographic segmentation based on measurable statistics, such as age or income; Psychographic segmentation based on lifestyle preferences, such as being urban dwellers or pet lovers. Market specialization is a business term meaning the market segment to which a particular good or service is marketed. It is mainly defined by age, gender, geography, socio-economic grouping, or any other combination of demographics. It is generally studied and mapped by an organization through lists and reports zia@ziaahmed.org Page 3 of 14

4 containing demographic information that may have an effect on the marketing of key products or services. Defining a target market requires market segmentation, the process of pulling apart the entire market as a whole and separating it into manageable, disparate units based on demographics. The market segmentation process includes: 1. Determining the characteristics of segments in the target market. Then separating these segments in the market based on these characteristics. 2. Checking to see whether any of this market segments are large enough to support the organization's product. If not, the organization must return to step one (or review its product to see if it's viable). 3. Once a target market is chosen, the organization can develop its marketing strategy to target this market Evaluating the market segments 1. Segment size and growth Does the potential segment have the right size & growth characteristics 2. Segment structural attractiveness The company has to appraise the impact on long-run profitability of five groups: industry, competitors, potential entrants, substitutes, buyers & suppliers. Threat of intense segment rivalry: a segment is unattractive if it already contains number of strong or aggressive competitors. Threat of new entrants: a segment is unattractive if it is likely to attract new competitors who will bring in new capacity, substantial resources & drive for market share growth. Threat of substitute products: a segment is unattractive if there exists actual or potential substitutes for the product & this place a limit on the potential prices & profits. zia@ziaahmed.org Page 4 of 14

5 Threat of growing bargaining power of buyers: a segment is unattractive if the buyers possess strong or increasing bargaining power. Buyers' bargaining power grows when they become more concentrated or organized, when the product represents a significant fraction of the buyers' cost, when the product is undifferentiated, when the buyers are price sensitive. Threat of growing barging power of suppliers: a segment is unattractive if the company's supplier-raw materials, equipments etc. - are able to lower prices or raise the quality or quantity of ordered goods or services. 3. Company's objectives and/or resources The company needs to consider its own objectives & resources in relation to that segment could be dismissed because they do not mesh with the company's long term objectives. Even if the segment fits the company's objectives, the company must consider whether it possesses the requisite skills & resources to succeed in that segment. Sometimes companies use segments to market towards larger demographics Selecting the market segment 1. Undifferentiated Marketing: the firm might ignore market segment differences & go after the whole market with one market offer. It focuses on what is common in the needs of buyers. It relies on mass distribution & mass advertising. 2. Differentiated marketing: marketer identifies different market segments & designs a separate market offer for each segment. Here the sales & costs both are high. 3. Concentrated marketing: instead of going for a smaller share of a larger market the marketer goes for a larger share of one or more smaller groups. zia@ziaahmed.org Page 5 of 14

6 4. Micro-marketing: it is tailoring the marketing program according to location &/or individual customer needs & wants. National works won't work in local market Targeting strategy Targeting strategy or targeting is the selection of the customers you wish to service. The decisions involved in targeting strategy include: Which segments to target? How many products to offer Which products to offer in which segments There are three steps to targeting: Market segmentation Target choice Product positioning Targeting strategy decisions are influenced by: Market maturity Diversity of buyers' needs and preferences Strength of the competition The volume of sales required for profitability Targeting can be selective (eg.: focus strategy, market specialization strategy or niche strategy), or extensive (eg.: full coverage, mass marketing, or product specialization). Page 6 of 14

7 2. Branch The branch is located in Salmiya Kuwait. My basic customers are salaried high end people and small businesses and entrepreneurs. When we look at these two broad categories of clients which have different needs and has different attitude we have to develop two separate criteria s Personnel Account Holder Salaried Individuals Majority of the them Non Resident Indians With regular investment needs. Other Nationalities Local Kuwaiti Investors 2.2. Small Business Enterprises Small shop owners Small Business Owners Entrepreneurs Page 7 of 14

8 3. Need Assessment of My Customers 3.1. Personnel Account Holder They need recurring investment account deposit scheme so they can put some money into it and earn good returns. Small Deposits account with good returns Funds short and long duration India Specific Investment and Funds 3.2. Small Business Enterprise Daily Deposit Scheme Market Fund Leasing and Hire Purchase Accounts 4. Competition in the Market There are number of Islamic Banks and Mainstream banking in the same location and competition is fierce still as one of the best and well known bank we have edge over other. Our quality of service and personnel relation with customers will always be the point of success for our branch. All of our product and services are exactly designed to the need of the client so our happy customer will remain loyal to us. Second important factor is our track record and trust people has in our bank as top most and best service provider. Page 8 of 14

9 5. Investment Scheme 5.1. Investment deposits Investment Deposit: Our Bank offers this kind of deposit to customers looking for substantial returns before the end of the year. The minimum amount of this investment deposit is KD 10,000 (Kuwait Dinars ten thousand), where the customer is given a deposit certificate showing the invested amount, date of investment and due date. It is for a period of one year and is automatically renewed for a similar period. The deposit returns will be credited to the customer's banking account on a monthly basis. You will get many privileges while investing in Al-Kawthar Deposit, as your money will be invested for one year with relevant profit distribution in accordance with the Islamic Sharia Laws. Besides, you will be able to get financing facilities from OUR BANK sectors against the amount of the investment deposit as per OUR BANK terms and conditions. Unconditional Investment Deposit for a Limited Period: The minimum amount of deposit is xyz. It is for a period of one year and is automatically renewed unless the customer requests to the contrary before the maturity date. The customer can close it at due date and he is also eligible for the profits of the Unlimited Investment Deposit at the end of the maturity period. Investment Deposit ( For Three Months ) : zia@ziaahmed.org Page 9 of 14

10 The minimum amount of deposit is xyz. It is for a period of three months and is automatically renewed for a same period unless the customer requests to the contrary at least 6 working days before the maturity date. Investment Deposit The minimum amount of deposit is XYZ. It is for a period of one year, and is automatically renewed for a similar period unless the customer requests to the contrary at least 6 working days before the maturity date. Unlimited Investment Deposit (in Foreign Currencies): The minimum amount of deposit is USD XYZ or GBP XYZ or Euro XYZ. It is for a period of three months, six months, nine months or 1 year. It is automatically renewed for the same period unless the customer requests to the contrary at least two weeks before the maturity date Direct Investment Direct Investment Department (DID) functions as the equity investment arm of the Bank. DID is assigned with the responsibility of managing the Bank s direct investment activities classified according to investment objectives as follows: Strategic Investments - These investments are aimed at supporting the Bank s long-term expansion strategies. Medium-term Investments - The objective of these investments is to earn a sustainable stream of dividends and to liquidate and realize capital gains upon maturity. Short-term Investments - These are trading investments aimed at earning capital gains. zia@ziaahmed.org Page 10 of 14

11 The department aims to look for other investment opportunities and in the process of studying other regional and geographic expansions of the Islamic Financial Services International Investment Department (IID) The International Investment Department (IID) is one of the key departments within the corporate structure of OUR BANK. It is entrusted with the prime responsibility of executing the carefully devised Corporate Finance strategy of the Bank. IID comes under the direct purview of the Bank s senior management and is managed by a team of qualified and experienced Corporate Finance professionals. The department operates within a strict risk management framework, and continuously strives to keep pace with the best practices of the banking industry. Over the period IID has evolved into an important source of value creation for the OUR BANK as well as its customers. It has maintained a high reputation in the Islamic banking industry for its ability to structure innovative and competitive Shari a compliant investment products. Initiative of IID has helped OUR BANK carve out a special market niche for its Structured Finance activities within the Islamic banking industry. The rapid growth of the Bank s deposit base ably supports IID s growth objectives, and helps to maintain OUR BANK s leadership position in structured Islamic products. Moreover, the increasing demand for Shari a compliant investment modes and the growing market appetite for Islamic instruments resulted in opening up a number of new opportunities for IID. IID operations are organized under the following transaction support lines with the aim of developing specialist product knowledge and enhancing customer focus: zia@ziaahmed.org Page 11 of 14

12 5.4. International Real Estate The creation of a separate International Real Estate Department (IRED) was a strategic initiative of the management aimed at consolidating OUR BANK s strength in the property sector, with the specific objective of exploiting opportunities in the overseas realty market. This Department undertakes real estate investments in selected markets using a spectrum of asset types that include commercial, industrial and residential properties. IRED creates opportunities for OUR BANK and its clients through a planned acquisition of single and multi-family real asset portfolios. In most instances, the investment vehicles are structured in such a way, that, individual properties are grouped into a diversified asset portfolio wherein investors could participate to enjoy a steady stream of dividends and capital gains. IRED targets well located properties with high occupancy rates that generate a sustainable stream of cash dividends, and upside potential for capital appreciation. These investments are undertaken with the involvement of other real estate operating companies who join as co-investors and / or advisors in the process of asset acquisition, value addition and disposal Treasury Department The Treasury Department provides the Bank with the crucial direct link to local and international financial markets. The role of the Treasury function has rapidly grown over time with the growth of OUR BANK. This department has the prime responsibility of creating liquidity for the Bank, optimizing returns on the Bank s excess liquidity and analyzing the local and international markets. The Treasury Department employs highly trained professionals, and has state-of-the-art facilities to respond swiftly to dynamics of the market. Some of the Department s products are described below: Foreign Currency Trading zia@ziaahmed.org Page 12 of 14

13 The Treasury Department trades and controls Forex Exposure in designated foreign currencies on behalf of OUR BANK and its clients. This department offers a very competitive currency trading service, and its clientele includes major corporate organizations and high net worth clients from the asset management department. Trade Finance Murabaha This product is primarily targeted at the high end of the market. Customers could invest a minimum of 100,000 US Dollars or its equivalent in a designated currency and obtain attractive returns for varying tenors from 1 to 12 months. Funding OUR BANK Products The Treasury Department funds controls and monitors local and foreign currency needs of various departments of OUR BANK with both local and international banks through swapping (exchange of deposits) in accordance with Islamic Sharia a. zia@ziaahmed.org Page 13 of 14

14 We are click away Development of Private Placement Memorandum Fund Document Shariah Compliant Fund Structure s Sharial Compliant Acquisition Feasibility Studies All Your Corporate Finance Needs zia@ziaahmed.org Page 14 of 14