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please read 'Marketing to Generation Y' Case Study attached and answer the following questions in great detail below.

Questions for the case study

1 Do you agree with the article that targeting to Generation Y is the right marketing strategy for Banks? Why? Elaborate adding supporting concepts from the textbook.

2 In addition to what is presented in the article, what other activities you think would help banks get those targeted customers? What about the rest potential customers? Should banks care about them or focus on Generation Y only?

3 Do you think that targeting to Generation Y would be a good marketing strategy for any type of business? Why? Elaborate adding supporting concepts from the textbook.

CL Page view Read aloud Add text Draw Highlight Erase G eneration Y, born between 1979 of exchange that they learn quickly. on Facebook, she says, but there's more and 1999, are your bank's future. The way Gen Y communicates and that banks could do to attract Gen Y. They've already surpassed Baby consumes information is an essential part Tony Coretto, managing partner of Boomers in numbers and will exceed them of who we are, says Cobey Dietrich, direc- PNT Marketing Services Inc. in Long in annual income by next year. They're tor of advertising and public relations at Island City, NY says institutions may start 'digital natives," the first generation to Bel Air-based A.Bright Idea LLC. "Their distinct, co-branded spinoff sites targeted grow up with computers, but they're also computer will be their window to work. to Gen Y, with snappier design than a a social generation. How well you provide socialization, and online banking." "plain-vanilla" banking site. their favored technology and how you "Their social network defines their But the ease of establishing a long- use it to communicate with them will lives," says Anita Newcomb, president term web-based banking relationship with determine your success in recruiting and and founder of A.G. Newcomb, a Mary- Gen X and Gen Y also gives them more retaining them as customers. land-based management consulting firm opportunity to research the competition. For boomers, technology was an end focusing on the banking sector. These Banks have to adopt a different strategy in itself, says Larry Cohen, director of the social networks will be critical elements of of communication," he says. Gen Y will Consumer Financial Decisions group at banks' marketing strategies to reach this be suspicious of a standard corporate SRI Consulting Business Intelligence. But valuable customer segment. At present. line. Communications must be relevant for Gen X and Y, it's just another medium there are almost 60 banks with a presence and targeted. "If you're not on Facebook, 2 | The Maryland Banker 9/15/09 11:14:14 AM MarylandBanker302009_reprintind 2you're missing on an opportunity to image and updated the bank's web site to a provide information on your services, but clean, fresh and functional look. It markets you don't want to be overtly pitching or opportunities for first-time homebuy- Marketing to advertising." ers - the upper end of the age bracket for Gen Y. It also utilized a nontraditional Gen Y and Getting the message right approach with radio personality endorse- When First United Bank and Trust Their Parents ments in the Baltimore market with a Co. redesigned and updated its web site, campaign featuring regional talk show the bank's chairman drew from the ranks About 11 million U.S. households host Ed Norris, whose show targets men of bank employees under age 30. The aged 18 to 49. domicile children who can no longer Oakland, MD-based bank is now inves- be claimed on their parents' taxes. tigating an entry into mobile banking by Helping Gen Y help itself Larry Cohen, director of the Consumer Financial Decisions group at SRI next year - to be led by a Gen Y'er- and Another bank, the super-regional PNC is contemplating establishing a pres- Consulting Business Intelligence, calls Bank, teamed with IDEO, a research firm. ence on a medium such as Facebook or them Boomerangs, "A lot of entry level to do in-depth ethnographic studies across YouTube. "We're not there yet," says Rick jobs don't pay enough to support living the United States and South Korea, to Thayer, senior vice president and director independently or to support the determine what differentiates them from of marketing. "We're a community bank lifestyle to which children have become other age cohorts. Researchers visited cus- and we are fairly conservative. We're accustomed at their parents' house," tomers at home, asking about their money still in the process of understanding the he says. "Also, parents are more open management strategies and what they to having children stay in the home, commitment we make by going out there wanted to see in financial service tools. at all, refreshing the content on the web compared to previous generations." Gen Y customers want help to help site, and making sure we have the mes - themselves, says Michael Ley, vice presi However. he notes that there is consid sage right." Additionally, he says, as First dent of e-business and payments for PNC. crable pent-up demand for household United investigates mobile banking, it will Services have to be simple, clear and formation. "The speed with which want to make sure to offer the most secure on-demand because some of the day-to- households form increased in the 90s and site available, day money management concepts haven't dropped off a cliffin 2000. It has remained What does Gen Y want? Immediacy, been taught in school, he says. at a lower level since," he says. individualism and social interaction, PNC Bank's Virtual Wallet program, in Thayer says. When the bank redesigned development since late 2007, was launched Some adult children may remain Boo- and rebuilt its web site, it incorporated in August of last year. It calls the checking merangs into their 30s, an adult child practical financial calculators such as account the Spending account; dependency pattern Cohen regards as not the Lunch Savings Calculator, the Rent a short-term savings account with a lower optimal for either child or parent. Hav- vs. Buy calculator and the Cool Million interest rate is the Reserve account, and ing a Boomerang at home compromises calculator. "We added more content, so a long-term savings with a higher rate is parents' ability to save for retirement or when they visit the web site, it's not just the Growth account. Customers can move to downsize their living quarters. Then. static," he says . money between accounts by using a there's the wear and tear on the car, and A.Bright Idea's Dietrich says Gen money-bar slider. health insurance, If the child living at Y's understanding of technology is in- "We found that there are many home doesn't have a job that pays for nate - and their thirst for constant new customers trying to [aggregate informa- health care and they get sick, parents information requires that banks constantly tion] on their own," Ley says. "They won't let them go without, he says. refresh their web sites with new informa- have a checking account in which they tion to attract a generation that uses web might have tucked away $200 as a reserve A good bank product for Gen Y might products such as del.ici.ous and RSS feeds, We tried to visualize that and put it in a be to construct a long-term nest egg, to Clients with web sites five or six years old context they can understand. The Virtual start on the down payment for a house, that aren't getting any new traffic are very Wallet represents how these folks think or to pay down school or other debt, he likely not refreshing the site with informa- about their money." suggests. Another vehicle could help the tion Gen Y wants, she says. parent save for retirement. Alternatively, A. Bright Idea's client, Slavic Federal Two-way communication: a bank could develop a product for Gen Y Savings Bank, came to the agency for Are you ready for this? children linked to their parents, in which marketing support, Founded in 1900 in Gen Y wants the capability of critiqu- a parent could match a percentage of what Baltimore, it built its reputation as a "heri- ing customer relationships, and shar- the child puts in the growth fund. tage bank," good for stability and strength. ing that critique with their friends, "It's However, Dietrich says, the concern was essential for a bank to enable users to that the bank might appear too traditional critique their interface with the bank. for Gen Y. But few banks are thick-skinned enough The agency developed the tag line, to put those critique comments on line." "Discover Today's Slavie," to refresh its Newcomb says. Third Quarter 2009 | 3 anylandBanker302009_reprintindd 3 9/15/09 11-1Corporate transparency has become a retention strategy, it can be a growth critical element of the value proposal, par- communities, comparing rates and points. strategy," notes Coretto. "If you've got a ticularly since September 2008, the height and getting advice from their online com- customer you want to keep, enroll them of the financial panic on Wall Street, munity rather than the bank. in direct deposit payroll, online bill pay- It's a far cry from a generation ago - or Newcomb says, "Gen Y wants total trans- ment, or automatic transfer payments to even more recently - when talking about parency in disclosure of fees and terms, their credit card or mortgage. Anything and they want to align their values with money was considered taboo. "Given the that is a link that would have to be community ethic that has arisen with the values of companies [they perceive severed if the customer changes banks is Facebook, LinkedIn, Twitter, and other are ] like them . They will combine their one more reason to stay with the current social networking sites, there is an entirely social and civic beliefs with action." bank." different attitude about sharing personal That said, Gen Y is also more entre- How hard is it, really, to sever those information." Coreto says. "The advice preneurial than any other customer set, links? "The perception is often greater comes from the community. not a third and seem set to become the small-business than the reality." Coretto says. Filling out party like a bank." That leads to commod- owners of tomorrow. They'll need some forms, providing identification, setting itization of financial products and services help to get there, though. "They are up direct payroll deposit by providing your unless banks can make their messages well-educated but financially illiterate." employer with a voided check from the elevant to the community. Corelto says. Newcomb says. "They need products new account ( and usually waiting a pay cycle and services that facilitate their banking for the direct deposit to activate) takes Christina P. Ofvel is custom pubtrators calto for The wisdom. For example, products that help maybe a couple of days. Once a seamless Warren Goup publisher of The Markand So them develop a pattern of saving, because system is in place, 'Customers are loathe to they haven't been savers." disrupt that." Greed is good - NOT Young consumers who have tie-ins to "Gen Y is socially conscious, and Quicken or account aggregation sites such want their bank to be, too," says SRI's as Mint.com or Yodlee.com, have even Cohen. Gen Y has been exposed to the more reasons to stay with their current big financial scandals and implosions bank, rather than pull out and replace all of the past eight years. "This is a time their bank-related links. Once a customer of great velocity, For this generation to has these financial linkages in place "a have this exposure at a time when they bank has to do something egregiously bad are becoming independent, it will have to drive them away," Coretto says. long-term impact," he says. Of all groups surveyed, Millennials - Acceptance those aged 18 to 24 - present the lowest While Gen Y are the early adopt- level of confidence that Social Security ers of new technology, bankers say older will be there for them. But while they demographic groups are also adopting believe they'll have to work longer, they new technology at a quicker rate than in also want to not only do well, but to do the past, placing banks which offer new good. "Many have a responsible streak services earlier a competitive advantage as and a strong sense of civic duty," says the adoption rate accelerates. For the late- Cohen, "Gen Y may be first to say greed comers, new services become a "me-too" is not good." and profitability is not what it could have been with an earlier adoption rate, says Making it stick First United Bank and Trust's Thayer, who Research has determined that it's five sees the day when mobile banking will be to 10 times more expensive to recruit yet another free service, used as way to customers than retain them. Commu- increase sales and retention. nity banks' challenge will be how to keep He cites research that shows that Gen Y customers who move away from customers who regularly use online bill their home region when they leave col- pay are up to 95 percent less likely to lege, Newcomb says. leave compared to others, Customers who Gen Y is a natural for time-saving don't use online bill pay are 43 percent online applications that aggregate all more likely to leave. A person who uses a their financial information into one debit card is 1.5 times more likely to buy convenient place, promoting "sticky" be- another banking product than someone havior that results in customer retention. who just uses checks. "Sticky behavior makes accounts As Gen X and Y research mortgages 'stick' with banks, and makes them and other loan products, they can com- harder to disentangle. Rather than a parison shop within their respective online 4 | The Maryland Banker 9/15/09 11 14 14