Triodos Marketing Plan
Introduction
The objective of this report is to explore the relationship between the economic crisis and the Triodos brand across a wide sample of existing consumers of Triodos Bank, a European bank that only finances sustainable organisations (Triodos Bank 2011). The report shows that Triodos customers can be segmented into four clusters, and makes recommendations for marketing strategies using segmentation.
The economic crisis that erupted at the end of 2007 has negatively affected banks in Spain (El Pais 2012). However, since the banking crisis began, Triodos Bank? s Spanish operations have experienced significant growth (Triodos Bank 2011).
The report is structured in three sections:| 1. The rationale for the qualitative research methodology and segmentation research. | 2. The general methodological considerations relating to how the data was collected, and the objectives of each approach. | 3. Examples of output, recommendations for Triodos Bank marketing campaigns and the value of segmentation.
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The resources used include secondary sources and literature addressing the qualitative market research methodology and segmentation. Data collected in focus groups and in-depth interviews provide ample resources, with results illustrated in graphs and tables. This information allows us to consider the effect of the economic crisis on customers and how Triodos can target each individual segment. Qualitative Research Methodology Rationale for the chosen area of research:
1) Exploratory Studies Customer perception is a complex area and thus requires an exploratory qualitative approach at the beginning of the project.
Mariampolski (cited in Andronikidis & Dimitriadis 2003) suggests that qualitative research can produce more in-depth analysis than formal quantitative methods.
Appendix A illustrates the qualitative research process in detail.
2) Sampling The rationale for quota sampling is that it uses certain relevant characteristics to describe the population. If the sample consists of the same distribution along these characteristics, it is likely to be representative of the population on other variables too (Cooper & Schindler 2011).
3) Focus Groups Focus groups can be used to provide an analysis of changing ideas (Cooper & Schindler 2011).
In exploratory research, the data produced by focus groups can be used to enrich all levels of research questions (Cooper & Schindler 2011).
4) Individual Depth Interviews This methodology is a conversation between an individual interviewer and a single participant and is usually recorded and transcribed to provide rich detail (Cooper & Schindler 2011). In this stage, quantitative research is also carried out using scales. Semantic scales were used, as they are easier for respondents to understand and generate more consistent results than numeric scales (Urban Wallace Associates 2005). ) Segmentation Raaij and Verhallen (cited in Muhamad et al. 2012) explain that segmentation involves the identification of segmentation variables followed by segmentation of the market, which leads to target marketing. Segmentation must be preceded by an initial exploratory phase to obtain a clear understanding of certain aspects of consumer behaviour, as there is unlikely to be one single ‘magic bullet’ message strategy (Marshall 2012).
Figure 1 illustrates some of the benefits of using segmentation to understand customers. Figure 1: Psycographic Segmentation Surveys (Market Segmentation Strategies 2012)
Qualitative Research Methodology Considerations ;amp; Objectives 1) Sampling The first exploratory technique used in this study was the focus group. The participants were chosen from a pool of available and willing Triodos Bank customers. As the objective of the exploratory study was the segmentation of the Triodos clientele, adequate representativeness was required. Triodos Bank initially supplied information that the customer population had doubled during the economic crisis to 61,000 (Triodos Bank, 2011), with 43 percent male and 57 percent female.
Therefore, the quota would call for customers to be sampled at a 43 to 57 percent ratio, thereby eliminating distortions due to a nonrepresentative gender ratio of participants (Cooper ;amp; Schindler 2011). Triodos customers were contacted and asked to participate in focus groups with a small financial compensation (€20 per session). Successful participants were chosen in accordance with this gender ratio (34 women and 26 men). One consideration related to this type of sampling is that those who are included in the sample have effectively selected themselves.
Clients who decide to participate in the focus groups may not represent a true cross section of Triodos Bank customers. Quota sampling assumes that quotas on some variables imply representativeness on others (Cooper ;amp; Schindler 2011).
In this case, the assumption that gender is a variable that affects brand perception is not proven. Thus, we have no assurance that the sample is representative of the variables being studied (Cooper ;amp; Schindler 2011). Furthermore, the data used to provide controls may be outdated or incorrect.
However, due to time and budget constraints, quota sampling is the most appropriate methodology available for this project. 2) Focus Groups The objectives of group interviews include orienting the researcher to the field of inquiry, exploring a range of attitudes, opinions and behaviours and observing consensus and disagreement (Cooper ;amp; Schindler 2011). They can help a company obtain general background about an issue, generate research questions for quantitative research, reveal areas of opportunity and generate impressions and perceptions of brands (Cooper ;amp; Schindler 2011).
Considerations from the moderator? s point of view include obtaining detail without making participants feel uncomfortable, remaining neutral and extracting insights from potentially hours of discussion (Cooper ;amp; Schindler 2011). Furthermore, time constraints restricting the amount of detail given by each participant and non-verbal biases sent by the moderator can all influence results negatively. Dominant personalities – “dominator”, “cynics”, “blatherers” and “jokers” – can prevent valuable insights from shyer participants or “wallflowers” (Cooper ;amp; Schindler 2011).
The responses obtained in focus groups may also be distorted by social desirability issues (Babakus et al. 2004). However, a trained and experienced moderator should be able to avoid these pitfalls.
3) Individual Depth Interviews The objectives of the IDIs included complimentary quantitative research (differential scales) as well as participant-led discussions of their value systems, attitudes and beliefs. This information can later be used in determining product positioning and advertising creation.
Considerations of this methodology include the extensive amount of time needed by the interviewer to cover an adequate number of participants, in both conducting interviews and evaluating them, and the use of facilities for interviews. Also, some respondents feel more at ease discussing their behaviour and attitudes in group situations than with a single person (Cooper ;amp; Schindler 2011). 4) Segmentation The objective of segmentation is to understand the needs and characteristics of different segments of consumers.
Smith (cited in Muhamad et al. 012) explains that the ability to understand the specific requirements of different segments of consumers enables companies to achieve a competitive edge within the existing conditions of the market, whereas failure to do so can lead to the loss of market position. Machauer et al. (cited in Muhamad et al. 2012) divide consumer segmentation in the conventional financial services (CFS) into two categories: the a priori approach (demographic or uni-dimensional systems) and the post-hoc approach, based upon products, attitudes, lifestyles and, values. There are drawbacks to the a priori approach.
For example, geodemographic systems are based on the assumption that uniform types of people live in the same neighbourhoods, which is usually not the reality (Nayeem 2012). Similarly, when scaled data is mixed with other types of clustering the results lose accuracy, and the individual characteristics of each segment have to be evaluated in detail (Nayeem 2012). Gwin ;amp; Lindgren (cited in Andronikidis ;amp; Dimitriadis 2003) suggest that modern attempts at segmentation usually employ a posthoc approach, which uses psycographic determinants, such as personality characteristics, values, beliefs and lifestyle, to segment customers.
In this study, this approach is considered more appropriate, as the explicitly “ethical” nature of Triodos Bank, which sets it apart from other banks, means that customers are already divided from the general population along ethical lines. The Value of Segmentation Results ;amp; Recommendations 1) Focus Groups All data were collected at a facility in Madrid from a sample of 60 participants.
Six focus groups were established, consisting of 10 participants in each. As the only criterion was that the participant be a customer of Triodos, the ages of the participants varied widely between 24 and 65 years.
Each group met once. As the objective was to discover opinions of the economic crisis in Spain, and how customers related it to Triodos Bank, participants were asked free association questions and participated in general discussions, picture sorts and roleplays. As suggested by Patton (cited in Babakus et al. 2004), these techniques gave the researchers the opportunity to adapt the dialogue with respondents to their individual answers.
The results of this study greatly influenced the design of the next stage of the research, defining question content and ensuring the relevant variables were included.
Table 1 illustrates the recurring themes that were noted in the focus groups by the moderators. Table 1: Major themes from focus groups, regarding customer attitudes ;amp; perceptions of banks and the economic crisis in Spain. Participants were then asked to talk about their reasons for choosing Triodos Bank, when they became customers, and their perception of its brand image. The results allowed participants to be categorised into two main groups: 1.
Proactive| Participants who had become clients before the economic crisis began| 2.
Reactive | Participants who had become clients as a response to, or during, the economic crisis. | | | Proactive| | | | | | Reactive| Figure 1: Triodos customers divided into four segments: innovators, early supporters, new supporters and punishers Figure 1 illustrates that 50% of participants were proactive (became customers prior to the economic crisis) and 50% reactive (became customers during the economic crisis). Using further discussion, these two groups were then divided into four subgroups, depending on how they related Triodos Bank to the economic crisis.
Innovators (28%) – Members of this group were customers before the economic crisis began. They had a high level of awareness of the economic crisis and believed that Triodos Bank? s growth was a result of the crisis.
Early supporters (22%) – Members of this group had become clients of Triodos Bank before the economic crisis, but displayed less interest in and awareness of the economic crisis. New supporters (37%) – Members of this group had become clients during the economic crisis and were well-informed about the reasons for the economic crisis.
Punishers (13%) – These participants had become clients during the economic crisis as a result of their disenchantment with the Spanish banking industry in general and as a way of “punishing” the major banks within the system. These customers were highly informed about the economic crisis and the banking crisis in particular.
2) Individual Depth Interviews The second stage of the research process involved conducting individual depth interviews with participants. The participant led the dialogue, discussing their perceptions of Triodos Bank as a brand.
Seven point (scale: – 3 to + 3) differential scales with bipolar labels that had a semantic meaning were used to develop an understanding of stakeholders’ perceptions of the Triodos brand and themselves. Additional probing questions were then used to develop a full understanding of these perceptions and comments made. The results of these questions are summarised in Table 2. Table 2: Segmentation of Triodos Bank customers based on psycographic factors, showing mean scores on a -3 to +3 scale. Parameters| Innovators| New Supporters| Early Supporters| Punishers| Triodos Bank adds value to your life| 2.
6| 2. 12| 1. 9| 0. 88| Triodos Bank is an expression of your worldview| 2. 62| 2. 11| 1.
3| 0. 97| One person can make a real difference| 2. 71| 1. 3| 1. 98| 0.
04| You are personally empowered in society| 2. 55| 1. 99| 2. 3| 0. 12| You have recommended Triodos to friends/family/colleagues| 2.
13| 2. 81| 0. 18| 0. 2| Figure 2: Respondent agreement with the statement “Triodos Bank adds value to your life” Figure 3: Respondent agreement that Triodos Bank is an expression of their worldview Figure 4: Respondent agreement that one person can make a real difference in society Figure 4: Respondents? greement that they are personally empowered in society Figure 5: Respondent word-of-mouth promotion of Triodos Bank 3) Recommendations The results of the personal interviews were then collated and the four clusters could be described in more detail. Considering the implications for positioning, image, communication strategies, brand equity management and perceptual competition analysis, it is important to use the data to reveal clusters with different brand perceptions (Brandt et al.
2011). Cluster 1 | Innovators | This cluster is generally in line with the “innovator” category in the VALS system (Strategic Business Insights 2009-2012).
As illustrated, they had the highest sense of personal empowerment and felt strongly that Triodos added value to their lives and expressed their worldview. The brand satisfied the “self actualisation” and “self esteem” strata of Maslow? s hierarchy of needs (Nayeem 2012) (see Appendix 2). They felt personally involved in the growth of the bank, and brand perception was the most positive with this group.
78% said their perception of the Triodos brand had improved as a result of its “ethical” behaviour compared to other banks. Marketing activities that focus on Triodos Bank? innovative business model, comparing it favourably with other banks, and which reward these loyal, early customers could help develop the Triodos brand. Cluster 2 | New Supporters| This group displayed many of the same characteristics as the innovators. However, they had a lesser degree of proactivity, and usually waited for their social network to recommend a product before trying it. Banking with Triodos was an expression of their belief in sustainability and grass-roots, community-based enterprise. 91% said they had become customers of Triodos as a result of the economic crisis, in order to support a positive new approach to banking.
More members of this group had recommended Triodos to friends, co-workers and family than any other cluster. Marketing activities emphasising the newness and “positive” aspects of the Triodos approach and encouraging word-of-mouth promotion through including social networking campaigns would help develop the Triodos brand with this group. Cluster 3| Early Supporters| The members of this group tended to be conservative in their consumption of products and services. They had a general distrust of the economic system, and preferred Triodos because of their perception that it was not involved in the mainstream loans and mortgage market.
Of this group, only 18% said their perception of Triodos had changed as a result of the crisis.
Interestingly, this group was very much in favour of the European Union and preferred Triodos specifically because it was a European (not Spanish) bank. The brand satisfied the safety and security needs level of Maslow? s hierarchy of needs (Nayeem 2012). Marketing activities emphasising the stability and longevity of Triodos, its European nature, and its avoidance of risky behaviour, would appeal to the conservative nature of this cluster and help develop the Triodos brand.
Cluster 4| Punishers| This cluster had the least positive brand perception of Triodos. They were clients because they considered Triodos Bank the only available option in the banking sector.
Largely hostile towards the financial system in general, this group has the lowest sense of personal empowerment and belief that Triodos expresses their worldview. 96% had become clients as a result of the economic crisis, but 67% said they would prefer not to use a bank at all. This group? perception of Triodos was merely that of a weapon in order to punish the major banks. Marketing activities that focus on the non-traditional aspects of Triodos Bank, and its support of alternative business ventures, would be more appropriate for this cluster. As this group especially approved of Triodos? emphasis on transparency, campaigns positively comparing Triodos? transparency and accountability with that of major banks could be used to target this segment.
4) The Value of Segmentation Edris et al.
(cited in Muhamad et al. 012) explain that market segmentation is often considered key to improving marketing activities, guiding a bank in its marketing strategy and positioning, and allowing resources to be allocated among markets and services in the banking industry. Using segmentation, a bank can position itself favourably within a particular marketplace relative to competitors and thereby earn high rates of return or profits irrespective of average profitability within the market (Zineldin 1996). This is especially pertinent in Spain? s current economic climate. Conclusion This study addressed the fundamental need for market segmentation in Triodos Bank? customer pool, by implementing a qualitative and quantitative research approach to understand consumer perception of the economic crisis and its relationship to the Triodos brand image.
The results of the focus groups and subsequent interviews identified that Triodos? customers can be divided into four clusters. The innovator group is pioneering and influential, and should be rewarded for their loyalty to the brand. The new supporters are reactive consumers, whose perception of Triodos is highly positive but mostly as a result of the economic crisis. They are valuable because of their high word-of-mouth promotion.
Early supporters are largely unaffected by the economic crisis and could be rewarded for their loyalty, but emphasis needs to be placed on privacy and security.
Finally, for the punishers, the most important feature of the Triodos brand is its departure from the traditional banking practices. Triodos should be positioned as a radical alternative and emphasis placed on the fact that it is the first ethical bank in Spain. Using the information provided in this report, Triodos Bank can now embark on a positioning campaign and target the various clusters within its customer pool to achieve greater brand loyalty and improve brand perception.
