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Services Marketing Case Study Assignment; Virgin Money Personal Financial Services
The Virgin Brand
You bought the record, you drank the cola, you took the aeroplane to New York. Richard Branson’s Virgin empire is more than a casual assortment of consumer goods and services in marketing terms, it is a whole way of life. Virgin Money provides a range of personal financial products for the consumer market. It was established with the same ethos as other Virgin products. If an industry needs sorting out Richard Branson is interested in doing so. The brand image of good service, good value for money and challenging to status quo has led Richard Branson’s Virgin Group to diversify into a variety of seemingly unrelated sectors. In the words of Jayne-Anne Gadhia, former operations director of Virgin Money:
�The Virgin brand is about taking on the rest of the Industry. It is a brand with personality. Richard Branson is seen by the public as a customers champion, who is allowed to question how to do things better and differently.
Virgin Money
In March 1995, the Virgin Group set up a joint venture with Norwich Union to enter the financial services market using the telephone as its distribution method and initially launched with the brand name Virgin Direct. On entry into the market, Virgin stated its aims:
�To advertise itself as the friendly face in a world of financial cowboys. The combination of easy to understand products and low initial charges will soon be applied to pensions and life insurance, where public faith has been shaken by accusations of mis-selling and over-charging.
The Virgin Personal Equity Plan (PEP) was Richard Branson’s attempt to attract new customers into a market that he felt to be over complicated. With its initial product, Virgin made innovative use of index tracking, a technique of investment which shadows the performance4 of the All Share stock market index, rather than using fund managers who pick and choose the companies in which they invest. At the time of its launch this was the lowest priced PEP, with no entry and exit charges. Virgin Direct managed over 1 billion on behalf of its 200,000 customers and the Virgin Growth PEP had established itself as the UK’s most popular PEP, Virgin’s entry into this market forced established firms to review their charges and brought a number of other non-financial services firms into the no-frills sector.
Building on its early success, in June 1996 Virgin launched life insurance, health and critical illness plans and on 1 November 1996, entered the pensions market. The introduction of these new, more complex financial products was a significant step. Virgin’s PEP products were initially sold on an execution-only basis; customers made their own decisions about the suitability of the product based on the information provided. With a core product range in place, Virgin Direct introduced a service to advise customers about the best financial choices for their own particular circumstances. In February 2002 Virgin Direct merged with its online partner virginmoney.com to become Virgin Money. In March 2005 Virgin Money celebrated its 10th anniversary. During that period Virgin has launched a number of financial products. Virgin One account, a current banking account was launched in October 1997. Following on from this product launch Virgin Money have launched a deposit account (November 1998); A range of ISA’s (Individual Savings Account – April 1999); Stakeholder pensions (April 2001); Credit cards (January 2002); Personal loans (May 2002); A range of insurances (May 2004); Guaranteed Equity Bond (August 2005). In addition to building a comprehensive personal financial product range, Virgin Money also sought growth in new geographic markets, launching their credit card in Australia and South Africa.
Overall there has been variable success in international markets. The Virgin credit card in South Africa launched in 2006 in partnership with ABSA, is still present in the market, however there have been no new products launched since that date. In Australia Virgin Money initially increased their presence in the financial product market building on the launch of the credit card. However the superannuation products and home loans were withdrawn from the market after the credit crisis of 2007, and the credit card transferred back to its supplier Westpac Banking Corporation. Currently, Virgin Money plans to launch a suite of retail banking services from its strategic alliance with Citibank.
Virgin Money launched in the US in 2007, after taking a majority stake investment in CircleLending. Virgin Money USA has subsequently withdrawn from the market in 2010, a result of a market characterised by tough economic conditions and a reflection of lack of consumer trust in the banking sector.
In January 2010 Virgin Money acquired a small bank with no branches, Church House Trust for 12.3 million pounds. The primary objective of the purchase was to enable Virgin Money to apply for its own banking licence in order to develop its own financial products rather than run in conjunction with other financial service providers. On the 17th November 2011 it was announced Virgin Money it was going to purchase the retail arm of Northern Rock, a bank the company failed to purchase in 2008. The sale went through on 1st January 2012, and Virgin Money has promised to keep the headquarters and mortgage and saving business at the current location in Newcastle upon Tyne.
Alongside the success of Virgin Money products, the company has built a reputation in the industry for providing superior services, winning several major industry awards.
Virgin Money’s target market in the UK can be broadly described as aged 35+, ABC1 adults. The company has a wide appeal and, while viewed as a young brand, has been particularly successful in attracting older age groups. The opportunity created by an often ill-served customer cuts right across the demographic groups. The financial services market has historically been product orientated. Traditional banks and financial service providers have been concerned with creating clever products that are expensive and ineffective in meeting customers needs. Virgin Money’s approach to financial services is a virtuous circle. They aim to identify a genuine customer need, then design products which meet that need, offered by a company that can be trusted. In this way, the maxim that financial services must be sold, because they are not voluntarily bought, can be broken. In addition to providing financial products that customers want, Virgin Money is clear in its communication to customers, making statements not claims about their products. Plus the company aims to provide reassurance and support to customers in their financial decisions by having a user friendly website with the added provision of a customer call centre. Part of Virgin Money’s strategy is to put customers firmly in control by giving them the information they need, with a ‘no pester promise’. A response to the hard sell tactics traditionally associated with the industry. In its simplicity and clarity, Virgin Money’s literature differs markedly from the complex financial formulae usually found and is one of the major tools in showing Virgin’s different approach to the business. Indeed Virgin Money’s pension pack won a top award from the Plain Language Commission.
The real challenge for Virgin Money is to continue its outstanding success both in providing superior products and maintain growth in an increasingly competitive market that is likely to face further competition in the future. The industry is continuing to attract new service providers, and those traditional industry players are re-evaluating their product portfolio. As a result Virgin Money need to constantly be aware of changing demands to offer the market high quality financial products consistently.
Case Study Assignment.
Provide a Services Marketing Strategy for ONE of Virgin Money’s products. Within your answer you should recommend a growth strategy justifying your reasons for choosing the direction for growth with your knowledge of the market and the company. You should then provide a services marketing mix that will enable and support your growth strategy. Students if they so wish may research the company and the market further with appropriate referencing.
Case study Assignment
Case Study Brief and layout
Students should initially use their research on the company and product (ie prestcom and swot) to provide information on their analysis of the situation at present for the first part of the assignment. It should take up no more than a third of the total word count. The detailed prestcom and swot should be in the appendices and will not form part of the word count.
The next section should focus on students analysis of growth strategies which should lead to a recommendation of an appropriate growth strategy(s) and justification for the choice. This should be approxiamately a third of the assignment. Remember to identify the objectives.
Finally students should detail the recommendations for the services marketing mix.
Dont forget to do an introduction and conclusion. The introduction should identify the specific product and reasons for the choice of the product from the company’s product portfolio.
Students should submit a receipt from turnitin when they submit the hard copy of their assignment at the student advice centre.
Students can use report format for the assignment but they can also use sub headings without numbering.
Please ensure the assignment is in 12point font (aerial or times new roman) and have a 1 1/2 space between lines. (you will not be marked down for this if you do not remember to do this).
You may use as many appropriate references as you wish – however remember this is an applied excercise so you do not need to explain what the theory is e.g. stating what prestcom is.
2500 words Assignment deadline 16th February 2012
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