Examining determinants of cross buying behaviour in retail banking

Ozuem, Howell & Lancaster (2016) are of the viewpoint that dynamicity of the contemporary business world had caused a significant amount of change within the buying behavior of the customers and also the kind of products or services that they opt for. Different organizations are resorting to the usage of different kinds of strategies so as to influence the buying behavior of the customers in the best possible manner and thereby to earn a higher amount of revenue (McIlroy, 2018). This report will analyze the concept of customer buying behavior and the impact of this concept in the particular context of the organization Commonwealth Bank of Australia.   

Commonwealth Bank of Australia also known by the name of CBA, founded in 1911 is not only the largest bank of Australia but also the largest bank of the entire Southern Hemisphere (Commbank.com.au, 2019). More importantly, the bank is known for the plethora of financial services that it offers to the customers starting from personal loans, saving accounts to retail or commercial loans, insurance, pension plans and others (Commbank.com.au, 2019). Furthermore, the bank under discussion here currently offers employment services to more than 52,000 people from different parts of the nation and the gross revenue generated by the organization for the year 2017 was more than A$26.005 billion (Commbank.com.au, 2019). In addition to these, the bank in conjunction with Westpac, First National Bank and ANZ is called by the name of “Big Four” because of the economic contribution that they make towards the national economy of Australia (McIlroy, 2018). However, the results of the Royal Banking Commission of 2017 revealed that the bank along with the other ones of Australia were taking the help of unethical as well as unfair business practices to enhance the amount of revenue gained by them and were at the same time misleading the customers as well (O’Connor, 2018). This had adversely affected the business prospects of the under discussion here and the net result of this is that the bank had lost a substantial amount of the monopoly that it used to hold in the financial business market of Australia.    

The customer base on which the organization under discussion here is currently focusing are the working class individuals who belong to the age bracket of 30-54 years of age. More importantly, it is seen that although the organization takes had taken the individuals related to this particular age bracket as their major customer base it is seen that different kinds of services are being offered by the organization to the diverse people related to this particular bracket so as to accommodate each and every need of theirs (Pilbeam, 2018).

What Impact of customer loyalty and service operations on customer behaviour and firm performance?

Figure 1: Target Customer profile of CBA

Source: (Pilbeam, 2018)

Abdeen, Rajah and Gaur (2016) are of the viewpoint that one of the most important aspects of the segmentation process used by the organization is its extensive usage of the innovative strategy of usage-based segmentation. As opined by Pearson (2016), this kind of segmentation focuses on the behavior of the customers and thereby helps the organizations to design their services or products in likewise manner. More importantly, it is seen that the organization focuses mainly on the customers related to the city areas like Melbourne, Perth, Adelaide and others so as to derive the maximum amount of financial rewards. In addition to these, it is seen that the organization in the recent times is trying to enhance their existing customer base and thereby is trying to offer the kind of financial services which would be in synchronicity with the demands of the younger people as well as their financial needs (Yusof et al., 2015). More importantly, it is seen that the bank utilizes the social factors like family status, role of the family members and other factors for targeting the right kind of customers. In addition to these, the individual factors like age, education and profession also play a key role in the process of targeting and thus it is seen that the white-collar employees in the age bracket of 30-59 years of age are being targeted by the bank. According to Fatma, Rahman and Khan (2015), one of the major reasons for the extensive success gained by the financial organization under discussion here can be attributed to the effective usage of the segmentation, targeting and positioning strategies and also to the fact that the organization takes into effective consideration the needs or the demands of the customers.

The external factors of the Australian business market act as an opportunity for the organization, which it can utilize to attain a higher level of financial growth. However, the fierce competition within the Australian financial sector means that the customers switch their brands or services on a regular basis and this had considerably reduced the loyalty of the customers towards the organization in the present times. This in turn is adversely affecting the financial prospects of the organization under discussion here and the net result of this frequent switch in brands by the customers is the fact that none of the organizations are being able to profit in a significant manner from this (Amin et al., 2017). More importantly, in order to mitigate the adverse effect of these aspects the organization in the recent times is taking the help of aggressive marketing strategies and also using various kinds of advertisements to enhance its customer base. In addition to these, various kinds of discounted services are being offered by the bank in the present times to attract new customers so as to enhance the amount of profit or revenue earned by the organization.        

Analysis of Mobile Banking User Behavior Using Customer Segmentation

The situational analysis of the organization CBA which was conducted in the earlier clearly reveals that most of the external as well as the internal factors of the external business environment of Australia are congenial for the business operations of the organization under discussion here. For example, the stable political environment of the nation acts as an opportunity for the organization which it can utilize to attain a higher level of financial growth (Küster, Vila & Canales, 2016). Furthermore, booming economy of the nation ensures the fact that the people of the nation had to right amount of capital to opt for the financial services offered by the organization (Berbegal-Mirabent, Mas-Machuca & Marimon, 2016). In addition to these, the people of the nation like to insure things and also like to take capital on interest or use credit cards and similar services offered by the banks and this turn ensures the fact that the fact that the financial services offered by the bank are in demand with the people (Armour et al., 2016).

The technological advancements of the nation also ensures the fact that the organization is being to use these advancements to offer online payment options to the people and also to manage the data or the information of these transactions or the financial details of the customers in an adequate manner (Noori, 2015). Moreover, the lenient corporate laws of the nation also ensure the fact that the bank is being able to conduct its business activities in an effective manner and also in compliance with the stipulations or the legislations of the national government (Alshurideh, 2016). Lastly, the organization ardently follows the different environment legislations or the stipulations given by the national government so as to contribute in a significant manner towards the cause of the environment.      

Yusof et al. (2015) have articulated the viewpoint that the primary purpose of the different marketing strategies which the organizations use is to effective market as well as promote the products or services offered by them in an effective manner. As opined by Wali, Wright and Uduma (2015), effective marketing strategies not only helps the organizations to convey adequate information regarding the products or services offered by them to the customers but at the same time help them to grab new customers as well. In this regard, it needs to be said that the organization CBA takes the help of digital marketing strategies like SEO, content marketing, e-newsletters and others for the purpose of marketing (Amin et al., 2017). Furthermore, taking the help of these strategies the organization sends regular promotional email, e-newsletters and others to the customers to keep them updated regarding the financial services offered by them (Tung & Carlson, 2015). More importantly, through the effective usage of the processes of SEO and content marketing the organization had been able to create an effective online presence of the services offered by them to the customers.

How does the online service level influence consumers’ purchase intentions before a transaction?

CBA in addition to the digital marketing strategies also takes the help of the strategy of cost leadership so as to offer the best quality financial services to the customers and that too at a cost which is comparatively lower than the ones offered by the other financial organizations of Australia like Westpac, ANZ, First National Bank and others (Amin et al., 2017). In this regard, it needs to be said that the interest rate which is being charged by the organization for the various private or personal loans that they offer to the customers is only 3% which is way lower than the ones charged by the other financial organizations of Australia (Commbank.com.au, 2019). More importantly, the organization also actively takes the help of the marketing strategy of product diversification so as to offer a wide range of financial services to the customers. The net result of this is that the organization under discussion here in the present times had broadened the genre of services offered by it to the customers and offers not only personal loans, insurances, pension plans and others but at the same time different kinds of retail or corporate loans as well (Ramanathan, Subramanian & Parrott, 2017). Thus, it can be said that the extensive success gained by the organization under discussion here can be attributed to the effective usage of the mentioned marketing as well as promotional strategies.    

The findings of the Royal Banking Commission (2017) by revealing the unethical as well as misguiding practices used by the organization had adversely affected the brand image as well as the profitability of the organization under discussion here (McIlroy, 2018). For example, the commission clearly revealed the fact that the organization in order to earn more profit was not only misleading the customers but at the same time extracting more money from them than the amount they needed to pay (O’Connor, 2018). The net result of this is that in the recent times many of the loyal customers have stopped opting for the services offered by the bank and have switched over to its competitors. In addition to this, post the Commission the organization had failed to attract new customers within the fold of the organization and this is adversely affecting its profitability (Amin et al., 2017). In this regard, it needs to be said that the organization was asked to pay more than $1.6 billion to the national government as well as the customers as compensation for the fraudulent practices used by it (Pilbeam, 2018). More importantly, the analysis of the results of the survey (given in the excel file) clearly reveals that the majority of the customers of CBA post the revelations of this commission are opting for the services offered by the other banks and thus the loyalty of the customers towards the bank is at an all time low. In addition to this, the results of the survey clearly that a significant number of customers had switched over to the other banks because of the fraudulent practices used by it. This had led many customers to switch brands and move over to the other brands in the financial sector of Australia. The organization in order to overcome the adverse effects of these issues is currently taking the help of various kinds of corporate social responsibility (CSR) so as to improve its brand image within the financial business market. In addition to this, the organization is also using different kinds of digital marketing strategies like SEO, content marketing and others to advertise in an effective manner the positive aspects of the services offered by it. Furthermore, the organization at the same time is trying to bring in new customers and thereby increase the sale of the services offered by it to the customers.   

Explaining customers’ financial service choice with loyalty and cross-buying behaviour

Hjort et al. (2016) have articulated the viewpoint that because of the fierce competition which exists within the framework of the contemporary business world the behavior of the customers had changed in a significant manner. More importantly, in the present times it is seen that there are various factors which affect the buying behavior of the customers like price, product attributes, brand image of the concerned organization and others (Kaihatu & Spence, 2016). Furthermore, the prominence that the concept of customer buying behavior holds within the framework of the contemporary business world becomes evident in the emergence of the different kinds of theories or frameworks that are being used by the organizations. In this regard, it needs to be said that taking the help of the “theory of reasoned action” the organization CBA believes the fact that the customers are rational creatures and generally like to take the help of the kind product or services which appeals to their rational or logical self in the best possible manner (Paulssen & Roulet, 2017). The net result of this is that the organization in the recent times in order to appeal to the logical or the reasonable self of the customers in the best possible offers attractive financial services to the customers. In addition to these, the prices, promotional activities, brand image, durability and other aspects of the financial services which are being offered by the organization had been designed in such a manner that they are likely to appeal to the rational self of the customers.      

The customer base that the organization CBA is currently focusing is being focused by the other major organizations like Westpac, ANZ, First National Bank and others. The net result of this is that the choices that are available to the customers is numerous and thus the customers generally like to conduct their personal research and generally opt for the services which are best in synchronicity with their needs and budgets (Estrella-Ramón, 2017). More importantly, the gratification factors for the diverse customers are different and this is currently adversely affecting the prospects of the organization under discussion here. Thus, in the recent times it is seen that the customers are actively switching their brands from time to time and this had affected the business prospects of all the major financial organizations of Australia including CBA in a significant manner.

Figure 2: Brand switching factors

The customer base of Commonwealth Bank of Australia

Source: (Schaper, 2016)

An competitor analysis of CBA with the other organizations of Australia in terms of the services offered by it and also the buying behavior of the customers is being represented by the below given table-

The organization CBA actively takes the help of recent information technology for the purpose of the effective management of the information of the customers regarding their financial transactions with the organization. In this regard, it needs to be said that the organization had recruited some of the best information management experts of the nation so as to ensure that they is no error in the management of the information of the customers. More importantly, the customers in addition to the manual documents are also offered online portals through which they can access the details of their transactions with the bank or the services that they are using (Ramanathan et al., 2017). It is pertinent to note that the organization had developed this intense focus of the effective management as well as processing of the information of the customers not only to ensure the fact that the customers are getting quality services but at the same time to mitigate the fierce competition that it is facing in the financial business market of Australia (Kaihatu & Spence, 2016).    

• Ethical Leadership:The organization can change the “greed culture” which it had developed within its workplace through the effective usage of the process of ethical leadership. More importantly, the effective usage of this style of leadership will encourage the employees of the bank to take into effective consideration the concepts of ethics which will in turn benefit both the customers and the bank. Furthermore, this will help the bank to overcome the performance related issues that it is currently facing.
• Use of Sustainable Management:The organization in order to enhance its brand image needs to take into effective consideration the concept of triple bottom line approach to sustainable. The organization through the effective usage of this concept will be able to contribute in a positive manner towards the society, environment and the economy of Australia which will in turn help it to improve its brand image and thereby earn long-term growth.  

Conclusion 

To conclude, the concept of customer buying behavior had become the catch-phrase of the contemporary business world because of the fact that the financial prospects of an organization depends on the number of customers that they have. However, in the recent times it is seen that because of the large number of choices which are available to the customers their buying behavior had changed in a significant manner and this in turn had adversely affected the prospects of different organizations. The net result of this is that different organizations are resorting to the use of different kinds of marketing strategies so as to overcome the threats presented by this change in the buying behavior of the customers.

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The usage-based segmentation strategy of the Commonwealth Bank of Australia

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