Case Study for Banking Services: Foreign Bank Established in Bulgaria.
Globalization is growing faster than ever. In order to keep up with the competition, companies are forced to think globally and to expand their business across borders.
National boundaries are falling and multi-national companies are increasing in numbers. Due to the growth of the service sector and its important role for many countries in compensating trade deficits, as well as ist increasing internationalization, service companies have become more and more important.
Internationalization of the Banking Industry
Financial activity across borders is a phenomenon as old as international trade. Since the 1960s, the internationalization of banks has expanded at a rapid pace, and banks from all over the world have established themselves abroad since then.
Banks have been encountering numerous challenges during the past two decades, including recessions, competition and image problems. Additionally, many banks have been facing mature domestic markets with limited future growth potential, which as a result, has led to expansion of their services abroad. Today, they are more likely to be efficient and modern institutions operating in a highly competitive environment, and often on international markets.
Primary driving forces behind these transformations:
* the process of globalization
Globalization has affected the banking sector both directly, through the increasing interdependence of national financial markets, and indirectly, through the parallel internationalization of organizations. * the reduction of regulations concerning the banking industry in most countries * the technological expansion
For a long time retail banking operations have to a great extent been conducted nationally. Internationalization within this sector is now taking place, either through cross-border mergers and acquisitions, or through the establishment of subsidiaries in foreign countries.
Problems faced from a bank operating abroad
Operating abroad involves many difficulties, such as cultural differences, language, laws and regulations, lack of foreign contacts and business connections. These factors are ever so difficult for banks, since their operations involve a high degree of risk taking. The establishment of banks has generally taken a long time and very few have attained a strong position on foreign markets.
Unfortunately, the issues of marketing are becoming more complicated as internationalization of financial services continues to increase. * Effective promotion of financial services is crucial since services are intangible products, and it is hard to stand out, considering the fact that all banks offer similar products. A bank´s services are seldom unique and they are easy for competitors to copy. * many people cannot make a distinction between different banks services and they are often not aware of the wide range of different financial services available. * The economies of the emergency markets some CEE countries are very different from industrialized countries, and their banking and communication systems tend to be rather underdeveloped.
Key Points to Analyse
Based on the problem discussion above, the purpose of this work is to gain a better understanding of international banks promotion strategies in the emerging CEE markets. 1. Describing the promotion mix for banking services in CEE. 2. Adaptation and standardization of the promotion strategy. External factors influencing the choice of promotion strategy for banking services in CEE
1. Promotion of Financial Services in CEE
Promotion is the direct way an organization tries to reach its publics. This is performed through the five elements of the promotion mix: * Advertising
* Sales Promotion
* Public Relations
* Personal Selling
* Direct- und Dialog Marketing
In spite of major changes on the...