Wachovia Corp. has agreed to acquire competitor SouthTrust Corp. Hibernia Corporation acquired Coastal Bancorp, Inc. J.P. Morgan Chase & Co. is cleared to absorb Bank One Corp.
Whew! Banking is no longer boring.
The Chase merger will form the second-largest bank in the United States, with $1.12 trillion in assets. For Chase, this requires a significant investment in new signage, company cards, letterhead, envelopes, displays, imprints on about 51 million credit cards, etc. There will be employee troubles and costs as nicely.
And take into account the thousands of other banks supplying the similar service: How will they compete? How can they compete? Some will not survive. One method is to come to be acquired. What other strategies are feasible? The answer: Prosperous differentiation that resonates in their marketplace. This is a valuable strategy even for those banks that are in the game to be acquired, because it will generate for them a greater purchase cost.
Differentiation. But what can be the difference between banks?
Some may possibly feel that banks are all alike and for this reason cannot be differentiated. Such unenlightened thinking is prevalent in lots of industries. History reveals however that anything can be produced distinctive and a preferred selection of buyers (and acquirers). For decades, catsup, pickles, flour and sugar were sold as commodities in huge unmarked tubs. Then Heinz, C&H and Gold Star came along and turned these commodities into exceptional brands and produced billions of dollars.
Even although they are practically identical biologically and chemically to the other competing brands in their categories, buyers perceived differences. And that influenced their buy choice. And it still does to this day.
How do we distinguish between similar brands and how does 1 brand turn into preferred?
The explanation is subtle. The much more comparable the competing companies are in a marketplace, the extra important any difference becomes. And when meaningful differences are difficult (or impossible) to acquire in their products or services, the market place will discover differences outside of the item or service. For this reason the cautious management of the seemingly inconsequential then becomes a priority required to obtain marketplace success. Market place-savvy companies all know this. Market leaders not only know, but also, demonstrate this fact.
If a bank is perceived as no several than its competition, it's in trouble. It's going to be a lengthy, tough journey, fraught with unbearable threat. It may possibly be a brief journey with a premature end. Building and communicating uniqueness in a way that resonates in the market is central to any profitable enterprise method.
Contemplate the history of banking.
In the starting a community had 1 bank. That was Stage 1. The city got a basic, acceptable dependable service. It was a minimal service, but the industry gladly accepted it. Then comes Stage Two: Competition. Now there was a second and a third bank. The citizens now have a choice of service providers. Now dominance depends on differentiating your service as the preferred option. Enter the notion of Advertising and marketing. They listen and make refinements that shoppers ask for: branches, ATM cards, credit cards, lower fees, specialized loan programs, toasters, blenders and other gimmicks. Now competition is entrenched. It's not as much fun getting a banker any a lot more. It is tough slogging. Couple of banks will enter Stage Three. Let me explain.
In the animated cartoon organization, Disney entered Stage 3 when it opened its themed amusement parks. That idea went beyond what consumers asked for. It was some thing no client imagined. "Focus Groups" did not come up with that notion.
And this is the key: To differentiate itself clearly from among a crowd of appear-alike banks who are all meeting buyers expressed requires, the Stage Three bank should surprise everyone with a marvelous new feasible idea that will resonate. And then promote it wisely.
Whereas Stage Two is industry driven, Stage 3 is imagination driven. Stage Two is responsive. Stage 3 is creative.
This is what Wells Fargo is suggesting with their slogan "The Next Stage in Banking." It is an appropriate slogan for Wells Fargo contemplating their history, name, stagecoach logo and the current scenario in banking. But will they go beyond that? I'm still waiting to see evidence on the horizon. Nevertheless, they have distinguished themselves from other banks with their coordinated and distinctive logo, colors and slogan. Seemingly inconsequential items.
Smaller banks can compete.
The smaller banks can not only compete but also truly overcome larger banks in their market place, but it requires focused creativity.
Most banks have a frequent theme: "Our Consumers Make the Distinction." Which makes sense, but the way they ordinarily express this "It is All About People today" theme represents dollars wasted. Simply because merely quoting that statement really communicates, "We're Not Unique, We're No Different, We're Ordinary," due to the fact competitors are saying the exact same factor. And of course, that is not a competitive sales position.
It will be interesting to see if any mid-sized or smaller bank will break out and effectively establish a great deal more influence in the way the market positions them. Considering that meaningful differences are tricky (or impossible) to uncover in competing bank services, the marketplace will pick a bank with some other difference that resonates, no matter how apparently inconsequential.
Frost Bank in Texas is carrying out an exceptional, coordinated job of reminding their market place, "We're from here," each time they reach their eyes or ears. Consequently, Texans tend to perceive a Frost banker as "1 of us." That's comforting. Stage Two is exactly where concentrate, and managing the inconsequential, turn out to be vital.
The most effective opportunity lies with the mid-size banks. It will not be straightforward although. In truth, it demands substantial intelligence and creativity, but the yield can be huge. Immediately after all, today's Chase began life as 1 bank location in Manhattan.
