Case: National South Bank National South Bank has been in business for National South is one of three locally owned more than ten years and has expanded to a to- banks, with total assets and facilities approxi- tal of eleven facilities in three different towns mately equal to the other two locally owned banks It is a locally owned and managed facility that combined. The difficulty National South faces is has built a solid reputation for service, especially the large regional and national banks in the town. with the business community. The retail side of There are eighteen of them, for a city with a pop- the business, which is directed to consumers, ulation of 95,000 and a county population of has done well, especially with the baby boomer slightly less than 160,000. Competition for cus- generation tomers is intense. But National South uncovered HO branch facility. It was now time to develop a mar keting program for the branch's grand opening The first step National South took was to seek information from Claritas about the geodemographie makeup of the area. Using PRIZM, Claritas located the top market segments in the area that made up 90 percent of the pop- ulation. These geodemographic groups are de scribed in Figure 15-13 The second step for National South Bank was to hire a direct marketing firm to handle the opening of the branch facility. National South one area of town, on the north side, where the recognized that it was in a delicate situation be- market appears to be underserved. The area has cause it already had three other facilities in the grown rapidly during the previous five years, and town. Although it wanted new customers for a bank merger had reduced the number of facil the branch, it wanted to attract customers from ities serving the north side. Eager to establish a competing banks, not have its current custom- presence in this area, National South built a large ers transfer their accounts to the new branch. PRIZM Cluster Name Second city elite Size Description 30% Upscale executive families Age group: 45+ Professional Household income: $67,800 24% Young, upscale, white-collar families Age group: Under 18, 35-54 Professional Household income: $62,100 Upward bound 16% Middleburg managers Mid-level, white-collar couples Age group: 35-44, 65+ Professional/white collar Household income: $42.000 This PRIZM Cluster Is Most Likely to Add a bathroom Own a laptop computer Own an Acura Read Bon Appetit Be brand loyal Buy a new station wagon Have 401(K) plan Watch The Tonight Show Read Vogue Own a laptop computer Have a home equity loan Watch the QVC channel Read PC Magazine Jog or run Shop at Target Buy a VCR Have a school loan Watch MTV Read Muscle and Fitness Be pro-wrestling fans Buy gospel music Own a Mazda Watch BET Read GQ 12% Small-town downtown Older renters and young Age group: 18-44 White collar/blue collar Household income: $22,800 Southside city 8% African American service workers Age group: 18-34 Blue collar/service Household income: $17,000 FIGURE 15-13 Geographic Composition of National South Bank's Market Area Source: Interview with Graham Morris of Newcomer, Morris & Young, January 9, 2003; Claritas, Inc.. available at http://cluster2.claritas.com, February 18, 2003 Chapter 15 Personal Selling and Direct Response Marketing 469 Although National South Bank was aware that facility, which could be followed up with a door some customers were likely to switch because the hanger placed at each resident's home. Another new location was more convenient for them, its suggestion was engaging in some tie-in partner- objective was to ensure that the vast majority of ships with a few of the businesses in the area customers were new. To attract these customers, where they could place free direct response mar- the bank would have to offer some incentives. keting pieces in the business and in the shoppers' Some that were suggested included: bags as they checked out. Free checking for six months Case Questions Free safety deposit box for one year 1. Which two market segments would you Free online banking for six months suggest that National South Bank attract? A free gift such as a kitchen appliance, Why? briefcase, or makeup kit Reduced introductory interest rate on a 2. What incentives would you offer to each mar- home equity loan ket segment selected in question 1? Why? 3. Design a direct-mail piece for National South National South Bank recognized that it could Bank directed to one of the market segments. not advertise these incentives on television or in 4. Discuss a direct response marketing program the newspaper without upsetting its current cus- for National South Bank that would include tomers, and it could not afford to offer these in- centives to all of its current customers. By using the market segments you indicated in ques- tion 1. a direct response marketing approach, National 5. Do you think that National South Bank made South felt that it could promote the new facility the right decision in not offering free incen- without many of its current customers knowing tives in television and newspaper ads? Justify what incentives were being offered. The direct marketing firm that was retained your answer. suggested that National South attempt a direct- 6. How would you advertise this new branch fa- mail campaign in the area surrounding the new cility without offending current customers at the other three facilities? Case: National South Bank National South Bank has been in business for National South is one of three locally owned more than ten years and has expanded to a to- banks, with total assets and facilities approxi- tal of eleven facilities in three different towns mately equal to the other two locally owned banks It is a locally owned and managed facility that combined. The difficulty National South faces is has built a solid reputation for service, especially the large regional and national banks in the town. with the business community. The retail side of There are eighteen of them, for a city with a pop- the business, which is directed to consumers, ulation of 95,000 and a county population of has done well, especially with the baby boomer slightly less than 160,000. Competition for cus- generation tomers is intense. But National South uncovered HO branch facility. It was now time to develop a mar keting program for the branch's grand opening The first step National South took was to seek information from Claritas about the geodemographie makeup of the area. Using PRIZM, Claritas located the top market segments in the area that made up 90 percent of the pop- ulation. These geodemographic groups are de scribed in Figure 15-13 The second step for National South Bank was to hire a direct marketing firm to handle the opening of the branch facility. National South one area of town, on the north side, where the recognized that it was in a delicate situation be- market appears to be underserved. The area has cause it already had three other facilities in the grown rapidly during the previous five years, and town. Although it wanted new customers for a bank merger had reduced the number of facil the branch, it wanted to attract customers from ities serving the north side. Eager to establish a competing banks, not have its current custom- presence in this area, National South built a large ers transfer their accounts to the new branch. PRIZM Cluster Name Second city elite Size Description 30% Upscale executive families Age group: 45+ Professional Household income: $67,800 24% Young, upscale, white-collar families Age group: Under 18, 35-54 Professional Household income: $62,100 Upward bound 16% Middleburg managers Mid-level, white-collar couples Age group: 35-44, 65+ Professional/white collar Household income: $42.000 This PRIZM Cluster Is Most Likely to Add a bathroom Own a laptop computer Own an Acura Read Bon Appetit Be brand loyal Buy a new station wagon Have 401(K) plan Watch The Tonight Show Read Vogue Own a laptop computer Have a home equity loan Watch the QVC channel Read PC Magazine Jog or run Shop at Target Buy a VCR Have a school loan Watch MTV Read Muscle and Fitness Be pro-wrestling fans Buy gospel music Own a Mazda Watch BET Read GQ 12% Small-town downtown Older renters and young Age group: 18-44 White collar/blue collar Household income: $22,800 Southside city 8% African American service workers Age group: 18-34 Blue collar/service Household income: $17,000 FIGURE 15-13 Geographic Composition of National South Bank's Market Area Source: Interview with Graham Morris of Newcomer, Morris & Young, January 9, 2003; Claritas, Inc.. available at http://cluster2.claritas.com, February 18, 2003 Chapter 15 Personal Selling and Direct Response Marketing 469 Although National South Bank was aware that facility, which could be followed up with a door some customers were likely to switch because the hanger placed at each resident's home. Another new location was more convenient for them, its suggestion was engaging in some tie-in partner- objective was to ensure that the vast majority of ships with a few of the businesses in the area customers were new. To attract these customers, where they could place free direct response mar- the bank would have to offer some incentives. keting pieces in the business and in the shoppers' Some that were suggested included: bags as they checked out. Free checking for six months Case Questions Free safety deposit box for one year 1. Which two market segments would you Free online banking for six months suggest that National South Bank attract? A free gift such as a kitchen appliance, Why? briefcase, or makeup kit Reduced introductory interest rate on a 2. What incentives would you offer to each mar- home equity loan ket segment selected in question 1? Why? 3. Design a direct-mail piece for National South National South Bank recognized that it could Bank directed to one of the market segments. not advertise these incentives on television or in 4. Discuss a direct response marketing program the newspaper without upsetting its current cus- for National South Bank that would include tomers, and it could not afford to offer these in- centives to all of its current customers. By using the market segments you indicated in ques- tion 1. a direct response marketing approach, National 5. Do you think that National South Bank made South felt that it could promote the new facility the right decision in not offering free incen- without many of its current customers knowing tives in television and newspaper ads? Justify what incentives were being offered. The direct marketing firm that was retained your answer. suggested that National South attempt a direct- 6. How would you advertise this new branch fa- mail campaign in the area surrounding the new cility without offending current customers at the other three facilities