NAB has a new marketing position
Opinion: Last Friday, NAB went to the mattresses and started a war. They started calling out their competitors in their advertising, singling them out by name and targeting their customers by offering to pay their exit fees.
There shouldn’t be too much hype about this – it is not revolutionary and comes straight out of the first year marketing textbook. If you’re not interested in marketing books, the same strategy has been thoroughly weaved into episodes of Mad Men.
In fact, this move is thoroughly overdue as there were too many banks standing on the pedestal of service.
NAB’s move needs to be looked at for what it is and it is being called the wrong thing thus far by commentators. It is not advertising. It is marketing. The reason that we’re confused is that marketing is something we’ve forgotten about with banks as we’re used to only seeing advertising from them and no change in their actual marketing.
All the Big 4 banks have been stuck on the same page of their marketing strategy textbook and have all been pushing the same positioning strategy, promoting their ‘service’ in increasingly illogical and inconceivable ways with their advertising. See here, here, here, here, here, here.
Each bank has tried to outdo each other in their representations of service (note, the exaggerated service claims made in advertising are also less regulated by ACCC and ASIC compared to bank claims about costs / cheapest loans etc). Some examples include Westpac saying that you should call them about anything, even the idea that you need a coffee in the morning which they probably don’t really mean as they really want to talk about banking, not caffeine. CBA said that you’ll be so shocked when they call you back that you’ll fall to the ground.
So, here’s what NAB have done – they’ve used a new marketing strategy. They’re putting the steps in place to be seen as ‘substantially different’ as they realise that there is a lot of apathy toward switching behaviour within the Big 4 – consumers see the Big 4 as a collective and they are not different enough from each other i.e. they are seen as one big group of boring.
NAB have started talking about a ‘break up’. We (NAB) are breaking up with the big banks…we’re breaking up with the Big 4.
That is memorable, clean, different and a great start. There’s so much more mileage they can get from this in all parts of their business, and there are different advertising executions that their ad agency is already rolling out to back the marketing position.
NAB are also targeting other bank’s customers with an offer to pay a customer’s exit fees of $700 if they switch to NAB from CBA and Westpac. As Westpac said internally, most people don’t pay these fees anyway as they keep their loans longer than 4 years before they refinance and switch. However, the idea is memorable and makes you feel like NAB want your business.
The breakaway strategy works because there were 4 very similar positions in the market from the Big 4. Breaking away means, that you’re telling the market the other 3 are the same, but not you. It makes it very hard for the rest to copy as you own the breakaway position. A second breakaway is seen as copycat and gets no mileage.
The market has been stalemated in terms of positioning strategies. All the Big 4 have probably poached each other’s staff over the past few years which would not have helped things either.
So here is the Marketing 101 behind NAB’s new positioning strategies.
Differentiation Strategies
A company can choose from these differentiation strategies:
- Product – you can differentiate your product on things like quality, performance, durability, reliability, style, design.
- Service – you can differentiate on services that accompany marketing, sales and after sales services, ordering ease, delivery, installation, customer training, customer consulting, miscellaneous services (NOTE: this is the rut big banks have all been stuck in).
- Personnel - you can differentiate by focussing on the personnel that interact with the customer with things like competence, courtesy, credibility, reliability, responsiveness, communication.
- Channel – the channels that you reach customers with in delivering your product or service and where you are available e.g. as the car insurance company for classic cars, and sold / endorsed at your local car club.
- Identity Differentiation - the identity of the company or product is communicated to the market by symbols, written and audiovisual media, atmosphere of the physical place with which the customer comes into contact. An effective image does three things for a product or company.
- It establishes the product’s planned character and value proposition.
- It distinguishes the product from competing products.
- It delivers emotional power and stirs the hearts as well as the minds of buyers.
It is pretty clear to see that the rest of the big banks are on option 2, Service, and trying to differentiate within this category via their advertising. NAB have jumped down the list to option 5, Image and Identity Differentiation.
The challenge in home loans has been that the actual end product (money) is pretty hard to differentiate (i.e. you get approved, get the money into your account, buy a home, and that money is the same colour no matter which lender you choose). The smaller non-bank lenders always position themselves as cheapest with their interest rates, so you can’t talk price either. So the bank almost always moves to try and differentiate on ‘service’.
In other categories, when your product is differentiated as an actual product (think iPod, iPhone), you don’t talk service, you talk design, features etc. as those are your differentiating points.
For those marketers in big banks today thinking of how to respond, sure, there weren’t a lot of options to start with. However, it does look like you all picked the same one for too long.
– Cameron Craig