Bank Marketers Learning Lessons From Consumer Products Companies

How is a credit card like a bar of soap?

Marketing minds want to know.

The breakneck growth of credit cards has left many consumers unable to tell differences among them. That's the classic definition of a commodity product, and it leads consumers to shop continuously for the lowest price.

Because this is old hat to packaged-goods companies like Procter & Gamble, Coca-Cola, and General Mills, bankers are looking in those directions for help.

But bankers aren't just cribbing from these organizations' vaunted advertising and brand-identity strategies. They are also cherry picking some of the most creative strategists to bring a new dose of sophistication to financial marketing.

"We are seeing banks borrowing from packaged goods companies in recognizing that the way our products are presented is important, that our image, our name, our level of service have to be connoted every time one of our customers uses one of our products," said Richard Dahl, president of Bank of Hawaii.

The Honolulu bank recently hired its head of consumer lending away from an advertising agency, where she led packaged goods campaigns. Last summer, Banc One and KeyCorp brought in credit card marketing executives from Dial Corp. and Pepsi-Cola Co., respectively.

And Citicorp, an acknowledged market leader, has cultivated the consumer marketing mind for decades. Its officer ranks have been replete with people from General Foods and others. Its new president is William Campbell, former chairman of Philip Morris U.S.A. Its director of credit card marketing is Richard Gaccione, who boasts a 20-year career in consumer products, including stints at Bristol Meyers and G. Heileman Brewing Co.

The theory is that marketing executives from consumer product companies are experienced in building brand and promoting a relationship between the brand and the consumer. Many bankers believe that these marketing concepts can be applied, whether the product is soap, toothpaste, or a credit card.

The theory, however, is not without its critics.

"Can you sell a credit card like soap? I don't think so," said an executive recruiter who asked for anonymity because his firm frequently places marketing executives from packaged goods companies into bank management positions.

"Banks think they are buying a magic bullet, and they're fooling themselves if they think hiring a marketing genius from Procter & Gamble is going to help them sell financial products."

But consumer products marketers who have crossed over to banking disagree.

"For credit cards, the marketplace is becoming more mature," said Scott Parker, senior vice president and marketing manager of Banc One Credit Card Services Co. "Consumer product people are used to a mature market, where they really have to understand consumer needs and understand how their product ranks as compared to competitors."

"Banks are just starting to learn how to leverage brand identity to build a competitive advantage. People with brand-building experience will help," said Mr. Parker, who joined Banc One last summer after a nine-year stint with Dial Corp. and previous experience with Procter & Gamble.

In historical terms, card issuers are about where the soap companies were half a century ago: offering several different brands under one roof, all competing against each other as well as with all other companies' brands.

A single U.S. bank is likely to offer a standard card, a gold card, another cobranded with an airline or some other consumer-oriented company, and others under the MasterCard and Visa umbrellas.

Consumers often cannot tell what makes one credit card different from another.

Contrast that with the toothpaste market. One company may market several distinct products, and the customer knows exactly what each will do: prevent cavities, control tartar, or eliminate bad breath.

"We must start with the needs expressed by the customer and then work back in from that," said Donna Hunt, the ex-advertising executive who oversees all consumer lending, including credit cards, for Bank of Hawaii.

"What banks need to do is design a package of services that comes with the card that suits the needs of our customers," she said.

"Consumers really don't care where their credit cards come from," said James Accomando, head of Accomando Consulting Inc., a Fairfield, Conn.- based credit card specialist. "People are shopping pricing and incentives, not just picking up whatever card is offered by their local bank."

"The problem with setting a low price is that anyone can copy that and match the price," said Roger Goldman, who was until recently executive vice president of retail banking for National Westminster Bancorp. "You have the same problem with product features - as soon as one bank comes up with a new feature, all the other banks copy it."

"This is what the industry had done, and it's been pretty destructive," he added. "What the banks should be doing is creating value for the customer, which the customer is then willing to pay a premium for."

Banks need to clarify who they are to consumers, who can be confused by consolidation. Brand identity, say marketing experts, is the perfect way to clear up such confusion.

Branding also can help transcend the price wars that have befallen the credit card world for the past few years.

Take, for example, Clorox bleach. Bleach is bleach, but Clorox has risen above many competitors. Its strong brand identity allows it to command a higher price.

One bank that is cited time after time for having done just that is Citicorp.

One in four U.S. households has a relationship with the New York-based institution. Its familiar credit card advertising tagline, "Not just Visa. Citibank Visa," is the envy of the industry.

"Citicorp has done a great job of getting its name out there, because they put their name on everything they do," said Mr. Goldman. "Citi has been working this well for a long time."

Most banks, however, have done a lousy job of eliciting trust from consumers, said many sources.

"That's why you see banks going outside the industry," said Mr. Accomando. "That's where they're going to get fresh ideas, innovation, creativity, a new view on how to sell credit cards."

Nonbank competitors have learned this lesson. Last year, American Express hired its head of worldwide advertising away from Coca-Cola. Several other American Express employees have backgrounds with packaged goods companies.

"When you say 'American Express' to a focus group, the people play back to you exactly the message American Express puts out in its advertising," said Art Clark, a partner with Business Dynamics Consulting Inc., a Nyack, N.Y.-based firm.

"American Express has convinced the public that it has a credible, trustworthy product," he said. "These are the traits banks have to try to get consumers to believe about their products."

To effect this change, banks will have to develop an arsenal of marketing weapons that include more than advertising and direct mail.

"While network TV is still the fastest and most effective way to get a message to the American public, there are lots of other channels," said Michael Beindorff, head of marketing for Visa U.S.A., who spent much of his career at Coca-Cola in Atlanta.

Mr. Beindorff said he expects banks to get more involved in event sponsorship, a marketing technique that can link a brand with a particular mindset. He cites as an example Visa's sports sponsorships with the Olympics, the National Football League, and the Triple Crown of thoroughbred racing.

"I call this presence marketing," said Mr. Beindorff. "It allows us to expand our brand awareness with very specific groups of people."

Mr. Beindorff, who worked on the product launches of Diet Coke and Minute Maid orange soda, firmly believes that marketing executives must be involved as products are developed. He said banks are "too compartmentalized."

Banc One's Scott Parker agrees.

"Virtually my whole organization is steeped in a financial services background," he said. "What I'm doing is leveraging their skills with my viewpoint on how to build competitive advantage.

"It's really quite simple," he said. "I find out what consumers want, and then my staff and I develop the functions we need to put on the card to meet those consumer wants."

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