nguyen thi thu hang_graduation thesis

Graduation Thesis Banking Academy

Nguyen Thi Thu Hang ATCA – K12

STATE BANK OF VIETNAM BANKING ACADEMY OF VIETNAM FACULTY OF FOREIGN LANGUAGE -‐-‐-‐-‐-‐��&��-‐-‐-‐-‐-‐

SOLUTIONS FOR THE DEVELOPMENT OF BANK MARKETING TOWARDS INDIVIDUAL CUSTOMERS IN

VIETNAM PROSPERITY JOINT STOCK COMMERCIAL BANK – VPBANK

Supervisor: NGUYEN THI HIEN HANH, M.A Student: NGUYEN THI THU HANG Class: ATCA – K12 Student ID: 12A7511056 )

Hanoi, May 2013



DEDICATION

I dedicate this graduation thesis

to my family,

my friends

and

to Banking Academy of Vietnam



ACKNOWLEGEMENTS

First of all, I would like to express the profound gratitude to my supervisor NGUYEN

THI HIEN HANH, M.A. for giving me great support, encouragement and constructive

feedback to accomplish the study.

I deeply appreciated all banking staff at Giang Vo sub-branch, Vietnam Prosperity

Joint Stock Commercial Bank – VPBank for assisting and instructing me with work

and data collection. I would like to give my special thanks to Ms. Bui Thi Huong

Giang, Manager of Customer Service

Finally, I wish to extend my heartiest thanks to all Banking Academy’s lecturers, who

have equipped me with sufficient knowledge and my family, who has supported me

wholeheartedly.



EXECUTIVE SUMMARY

This paper studies the solutions to improve the marketing activities in VPBank,

particularly towards individual customers. It goes adead to understand theoretical

framework related to marketing activities in banking sector before critically analyzing

the current situation of Vietnam economy and situation of marketing activities in

VPBank, primarily using four – year data from the VPBank Annual Report from 2007

to 2011.

The theory mentions five fundamental aspects of bank marketing, including concept,

roles, features of bank services, marketing strategy and tools used by bank marketers.

It suggests that marketing approach to banking services involves anticipating,

identifying, recipocating (through designing and delivering customer – oriented

services) and satisfying the customers’ needs and want effectively, efficiently and

profitably.

Particularly, the bank marketing proved to be a neccessary activity, which strongly

affect business performance of a bank. A study of its effects and problems was

conducted with an emphasis on the situation of VPBank operations. Indeed, the bank

has made continuous efforts in diversifing its products and services, adjusting price

policy, distribution channels, and particularly concentrating on human fators. The

impacts became apparent in recent years with the improvement in business reports and

the increase in customer satisfaction. Also, the limitation of public confidence together

with the modest performance compared to other banks were reported as the aftermath

of increasingly competitive environment, innovation in technology, customer focus

and awarenessm, suggesting that marketing activities in VPBank is still in need of

further improvements.

In an attempt to make VPBank more developed, some recommendations are proposed

to the banks, such as setting a dynamic competition strategy, effective branding and

image building; developing products policies, distribution channels and workforce

performance, as well as adjusting price strategy and improving promotion policy.



LIST OF TABLES AND FIGURES

LIST OF TABLES

Table 1: Total assets and charter capial of some banks by 2012 (unit: billion dong) .. 21

Table 2: Interest rates and the savings deposits (interest paid at maturity) 19/05/2013 ............ 27

Table 3: Number of VPBank branches and Trading Offices & Savings by 2012 ....... 29

Table 4: Deposit mobilization structure in 2010 – 2011 in VPBank ........................... 34

Table 5: Interest applied for Phat Loc savings in Techcombank ................................. 39

Table 6: Number of ATMs and Branches &Trading Offices by 2011 ......................... 40

LIST OF FIGURES

Figure 1: Structure of a bank product ......................................................................................... 8

Figure 2: Vietnam GDP growth rate from 2010 – I/2013 ........................................................ 14

Figure 3 : VPBank’s organizational structure .......................................................................... 18

Figure 4: Average measurement of Teller Service Quality in VPBank in 2011 ...................... 32

Figure 5: Operating time before and after the project Service Level Agreements ................... 32

Figure 6: Deposit mobilization from customers in VPBank from 2007 – 2011 ....................... 34

Figure 7: Outstanding loans to customers in VPBank from 2007 – 2011 ................................ 36

Figure 8: Some financial indicators in VPBank from 2007 – 2011 ......................................... 36



LIST OF ABBREVIATIONS

ACB Asia Commercial Bank

Agribank Vietnam Bank for Agriculture and Rural Development

Eximbank Vietnam Export Import Commercial Joint Stock Bank

ATM Automated teller machine

BIDV Joint Stock Commercial Bank for Investment and Development of

Vietnam

GDP Gross Domestic Product

HCMC Ho Chi Minh city

HDFC The Housing Development Finance Corporation Bank iff Sri Lanka

HSBC Hong Kong and Shanghai Banking Corporation

ICICI Industrial Credit and Investment Corporation of India

OCBC Oversea – Chinese Banking Corp

POS Point of Sales

ROA Return on Equity

ROE Return on Assets

SBV State Bank off Vietnam

SJC Saigin Jewelry Company

SLAs Service Level Agreements

SMEs Small and Medium Enterprises

Techcombank Vietnam Technological and Commercial Joint- stock Bank

USD The United States dollar

VIB Vietnam International Bank

Vietcombank Joint Stock Commercial Bank for Foreign Trade of Vietnam

Vietinbank Vietnam Joint Stock Commercial Bank for Industry and Trade

VNBC Vietnam Bank Card

VND Vietnam Dong

VPBank Vietnam Prosperity Joint Stock Commercial Bank

VPBS VPBank Securities Company



TABLE OF CONTENTS

DEDICATION

ACKNOWLEGEMENTS

EXECUTIVE SUMMARY

LIST OF TABLES AND FIGURES

LIST OF ABBREVIATIONS

CHAPTER 1. INTRODUCTION ................................................................................................. 1

1.1. Rationale of the research ..................................................................................................... 1

1.2.The objectives of the study ................................................................................................... 2

1.5 Methodology of the study ..................................................................................................... 2

1.6. Scope of the study ................................................................................................................... 2

1.7. Structure of the thesis ........................................................................................................... 3

CHAPTER 2. THEORETICAL FRAMEWORK OF BANK MARKETING ......... 4

2.1. Concept of Bank Marketing ............................................................................................... 4

2.2. The necessity of Bank Marketing towards individual customers ...................... 5

2.2.1. Marketing is effective tool to attract individual customers. ........................ 5

2.2.2. Marketing connects activity of banks and individual customers .............. 6

2.2.3. Marketing towards individual customers contribute to the bank’s

competitive position ................................................................................................................... 6

2.3. Marketing Mix in Banking - useful tool applied in Bank Marketing .............. 7

2.1.1. PRODUCT ................................................................................................................... 7

2.3.2. PRICE .................................................................................................................................. 9

2.3.3. PROMOTION ............................................................................................................... 10

2.3.4. PLACE ............................................................................................................................. 11

2.3.5. PEOPLE .......................................................................................................................... 11

2.3.6. PROCESS ....................................................................................................................... 12

2.3.7. PHYSICAL EVIDENCE .......................................................................................... 12

CHAPTER 3. THE CURRENT SITUATION VIETNAM ECONOMY AND

MARKETING ACTIVITIES IN VPBANK .......................................................................... 14

3.1. The background of Vietnam current economy ....................................................... 14



3.1.1. The stock market set a new bottom ..................................................................... 14

3.1.2. The slump in real estate market ............................................................................ 15

3.1.3. Disorder in gold market ............................................................................................ 15

3.1.4. Banking sector sinks into troubles ....................................................................... 16

3.2. Introduction of VPBank ................................................................................................... 16

3.3. The SWOT of VPBank ...................................................................................................... 17

3.3.1. STRENGTHS ................................................................................................................ 17

3.3.2. OPPORTUNITIES ...................................................................................................... 20

3.3.3. WEAKNESSES ............................................................................................................ 21

3.3.4. THREATS ....................................................................................................................... 22

3.4. The marketing strategies of VPBank ......................................................................... 23

3.4.1. PRODUCT POLICY ................................................................................................ 23

3.4.2. PRICE POLICY ......................................................................................................... 26

3.4.3. PLACE POLICY ......................................................................................................... 28

3.4.4. PROMOTION POLICY ........................................................................................... 29

3.4.5 PEOPLE POLICY ...................................................................................................... 31

3.4.6 PROCCESS POLICY ................................................................................................ 32

3.4.7. PHYSICAL EVIDENCE ......................................................................................... 33

3.5. The achievements of Marketing strategies in VPBank ....................................... 33

3.5.1. Deposit mobilization activities ............................................................................... 33

3.5.2 Credit activities ............................................................................................................. 35

3.5.3 Customer satisfaction ................................................................................................. 37

3.5.4. Awards .............................................................................................................................. 37

3.6. The problems of Marketing activities in VBPank ................................................. 37

3.6.1. PRODUCT ..................................................................................................................... 38

3.6.2. PRICE ............................................................................................................................... 38

3.6.3. PLACE ............................................................................................................................ 39

3.6.4. PROMOTION ............................................................................................................... 40

3.6.5. PEOPLE .......................................................................................................................... 41

CHAPTER 4. SUGGESTED SOLUTIONS TO IMPROVE BANK MARKETING ... 42



IN VPBANK .......................................................................................................................................... 42

4.1. Setting a dynamic and effective competition strategy ......................................... 42

4.2. Developing product policies towards diversification and modernization ... 43

4.3. Adjusting price strategy in line with market moves ............................................. 44

4.4. Developing distribution channels .................................................................................. 45

4.5. Improving promote policy ............................................................................................... 46

4.6. Developing and improving workforce performance ............................................ 48

CONCLUSION .................................................................................................................................. 49

REFERENCES .................................................................................................................................. 50


Nguyen Thi Thu Hang ATCA – K12 1

CHAPTER 1. INTRODUCTION

1.1. Rationale of the research

The 21st century challenged banks to prosper financially and survive in the face of an

unforgiving economic environment. The banks, which are unable to keep pace with

changed times and respond quickly to fast changes would be left behind in the race or

vanished. In this context, marketing is playing a key role in addressing those

challenges. Moreover, in a competitive market mechanism today, individual customers

with their own characteristics are playing an increasing important role in the

development of a bank. The proper attention to these customers will bring

considerable income and steady growth for banks, particularly for a bank with the goal

of "becoming one of the top five commercial banks, and top three leading retail bank

in Vietnam" as VPBank.

When the role of financial services offered by banks has grown continuously, there

were mounting pressure on bankers for a more effective marketing management of

their financial services. However, because of the current socio-political and economic

situation in Vietnam, the banks seldom thought of the necessity of applying marketing

task in their day-to-day operations in the past. While Vietnamese banks were

accustomed to traditional business, the counter-parts in western countries are

becoming financial supermarkets providing a wide variety of services. Because of the

inefficiency of understanding about marketing activities under banking approach and

tools used to achieve its objectives, it is difficult to design or evaluate policies and

programs intended to address prevailing problems in Vietnam commercial banks in

general and VPBank in particular.

This calls for adoption of marketing approach towards promotion of banking services.

Hence, the issue promoted me to conduct a study on “Solutions for the development

of Bank Marketing towards individual customers in Vietnam Prosperity Joint

Stock Commercial Bank - VPBank " as my graduation thesis. This paper is expected

to provide the understanding about the theoretical framework of bank marketing

activities towards individual customers; as well as the real situation, then draw results

and limitations as a base to bring about the practical recommendations.



1.2.The objectives of the study

The thesis attempt to:

- Provide an insight into the marketing activities in banking sector, especially

useful tools applied by marketers.

- Critically analyze the current situations of marketing strategies in VPBank; as

well as its achievements and problems in marketing activities.

- Propose some recommendations to accelerate VPBank’s Marketing activities

towards individual customers; improve its business performance and bank’s image.

1.4. Research questions

The study is conducted to answer following questions:

- How are marketing strategies applied in VPBank? What are the limitations of its

marketing activities?

- How to enhance the efficiency of marketing activities in VPBank?

1.5 Methodology of the study

The research applies comparison and contrast methods based on quantitative method

which is a research focusing on the collection and analysis of numerical data and

statistics. To find an appropriate strategy for VPBank, the thesis will also analyze

competitive advantages using SWOT model.

Data is collected from secondary data source. They are extracted from the public

annual reports of some commercial banks, to name but a few, VPBank, Vietinbank,

Agribank, Techcombank, VPBank’s surveys, banking articles and legal documents

related to banking system.

1.6. Scope of the study

Customers play an extremely important position in the existence and development of a

bank. In the context of recession, banks tend to concentrate on individual customers

who bring more stable benefits to banks than corporate ones who are facing many

difficulties. The present study is an attempt in studying marketing activities focusing

on satisfying individual customers’ demand. However, the research concentrates only



on the situation of VPBank, then give appropriate recommendations to this bank

without mentioning to other banks.

1.7. Structure of the thesis

In addition to Executive Summary and Conclusion, the thesis consists of four chapters:

Chapter 1 gives an Introduction about the whole thesis including research rationale

and research questions, methodology as well as the scope of the study.

Chapter 2 explains some theoretical framework of Bank Marketing, focusing on

marketing tools applied in marketing activities.

Chapter 3 describes the current situation of Vietnam economy and marketing activities

towards individual customers in VPBank in terms of elements of Marketing mix.

Chapter 4 gives some solutions to promote marketing activities for individual

customers in VPBank based on improving some limitations stated in chapter 3.



CHAPTER 2. THEORETICAL FRAMEWORK OF BANK MARKETING

2.1. Concept of Bank Marketing

Selling in banking is that of marketing concerned with demonstrating to the customer

that the service is right for him or her. It is therefore, one aspect of the marketing

process of promotion. If other aspects like identification of customer needs, price, etc.

are conducted properly, then the final act of selling should follow quite naturally.

Thus, in a marketing oriented bank selling act is the culmination of many other

activities all designed to create the sales opportunities. For this reason one cannot say

that banking and selling do not mix especially when considering the enormous range

of profit structured services offered by commercial banks.

The fiduciary role of banks stems from the need for bankers to gain commitment from

customers to buy their services, which generally do not immediately appear to have

life or death connotations or affect the quality of life of the purchasers. Return

business comes from satisfied customers and this is important in banking. Unlike food

or customer durables, which one has to buy to keep alive or remain decent and less

persuasion is required, financial services have to be more actively sold. Fiduciary

responsibilities are also related to the image of the bankers as impartial advisors.9

The concept of bank marketing has been generally viewed by various bank marketers

“as that part of the management activity, which seeks to direct the flow of banking

services profitably to selected customers”. From a strategic managerial perspective

“bank marketing is an integrated business activity directed at identifying, creating and

servicing demand”. Marketing activities must be integrated throughout the entire

planning process and should permeate every aspect of a bank’s activities, from

receiving deposits to corporate planning. Since the marketing focuses on the

customers, the success of the bank is depend in its capacity to satisfy consumer wants

and needs.

A comprehensive explanation of bank marketing is given by Deryk Weyner of

Barclay’s Bank. According to him, bank marketing is identifying the most profitable



markets now and in the future, assessing the present and future needs of customers,

setting the business developments goals and making plans to meet them and managing

the various services and promoting them to achieve the plans – all in the context of a

changing environment in the market.” Thus the adoption of marketing concept by

banks recognizes that customer’s needs are changing and banks must define these in

explicit terms to satisfy them at a profit to the bank.

The marketing concept basically requires that all activities that have any relation with

the customer should be entirely co-ordinated by the marketing element in the bank. In

other words, that a way of thinking along marketing lines is permeated into all areas of

banking so as to enable the establishment of a marketing – oriented operation.

2.2. The necessity of Bank Marketing towards individual customers

2.2.1. Marketing is effective tool to attract individual customers.

Customers play a vital role in banking activities. The demand of individual customers

is diverse, especially in the growing and constantly changing society. Therefore, the

use of marketing tools to uncover the needs of individual customers can be seen that

the initial success of the bank, then banks will conduct research to launch new

products to meet customers’ needs.

Moreover, individual customers tend to make a comment on the pros, cons and quality

of products and services. Therefore, the marketing of improved service will retain

customers, create better assessments and have a strong influence on the decision of the

group of potential customers. Because those who are satisfied by banking products

will become effective advertising tool, banks will pay no cost. At the same time, banks

also need to conduct marketing activities to "nourish" the satisfaction of individual

customers in order to prevent them from falling into the “marketing trap” of other

competitors.

On the other hand, a significant amount of individual clients works in corporate, once

they are met their needs, the bank have more chance to be introduced to their work,

which means increasing organizational customers (in addition to individual

customers).



2.2.2. Marketing connects activity of banks and individual customers

Personal customer service is both the object of both the banking market. Meanwhile

the bank's operations and market relationships and the impact of organic influence

each other directly. Therefore, to understand market needs to be closely linked with

the activities of the bank will make the market of banking operations with high

efficiency. This will be made possible through a bridge bank Marketing by Marketing

help identify market factors, changes varied needs of individual customers about

products and services.

On the other hand, marketing is a tool to lead the direction of capital flows, exploiting

the ability to mobilize capital, transfer the needs of the capital properly. Thanks to

marketing, banks can coordinate and orient the activities of all departments and all

employees to better meet customer needs. According to R.Brion and J.Staffort in the

article named "Myths of Marketing in banking activities", the two-side role of bank

marketing is stated: one is the determination of marketing mix methods on the basis of

market research to capture the business opportunities; the other is the combination of

all banking activities in the desire to satisfy the needs of customers (especially

individual customer with diverse desire) at the highest level, which also brings benefits

to the banks.

2.2.3. Marketing towards individual customers contribute to the bank’s

competitive position

One of the important tasks of marketing in banking sector is to create its competitive

position in the market. Due to the diverse and complex needs of individual clients, the

creation of the distinctive products and services with competitors is the fact that banks

have created its competitive position.

The process of creating the competitive position of banking is closely related to the

creation of distinct products and services and specification of these products and

services in target markets to make individual customers realize their benefits. Hence,

the creation of the competitive position relies heavily on the marketing ability of each



bank. It requires marketing department must be fully aware of the possibility of the

bank, the techniques used, as well as the specific needs of the target market.

2.3. Marketing Mix in Banking - useful tool applied in Bank Marketing

Marketing strategy is a plan for selecting and analyzing a target market and

developing and maintaining a marketing mix that will satisfy this target market. A

target market is a group of consumers at whom an organization directs its marketing

efforts.

The marketing mix consists of four basic variables: Product, Price, Promotion and

Place. A major task of marketing management is to blend together these elements of

the marketing mix in such a way that they fulfill the needs of selected target markets.

However as a service is not tangible the marketing mix for a service has three

additional elements: People, Process and Physical Evidence.

2.1.1. PRODUCT

The products of a bank are essentially services. Under the marketing concept services

offered by the banks have to be worked out after taking into account the customer

needs and preferences. In this perspective what the customers are buying from the

bank is security, convenience, prestige, freedom and a number of other want and need

satisfying extensions that are packaged in the form of basic banking services.

The product component of the financial services marketing mix is affected by the

problem of copying. It is difficult to use specific service attributes as the basic for

developing competitive advantage because distinctive attributes are easily duplicated

by competitors. By contrast, improvement in the quality of service provision in general

and customer care in particular, are recognized as being important strategies for

successful product differentiation.



Product development can serve bank marketing ends by attracting consumers from

outside the present market, increasing sales to the existing market and reducing the

cost of providing an identical or similar service. The product development strategies

include expansion strategy, differentiation strategy and satlelite product strategy.

The banking products will be set of different features and functions, which satisfy

diverse needs of customers. However, a banking product is usually composed of three

levels.

Figure 1: Structure of a bank product (Source: Bank Marketing Textbook, Banking Academy, 2004, p.45)

Firstly, the core product

The core banking products usually meet urgent needs (main) of customers. In essence,

these are the main benefits that customers look for in a bank, the core values that

banks need to sell to customers.

Secondly, the tangible product

Meet

essential demands

Form Symbol

Image Terms

Promotion

Additional services

Core Products

Tangible Products

Additional Products



The tangible product is the specific part of banking products. This is a form of

expression outside of banking products and services such as its name, form,

characteristics, symbols, terms of use. It is the base for customers to identify,

distinguish, compare and select products and services between banks.

Thirdly, the additional product

The additional products are other benefits added to the existing products or services, in

addition to the primary benefit of the customers. They make banking products and

services more complete and satisfy the needs and desires of customers, differentiating

themselves from competitors. The additional products are also strong elements of

competing banks today because of its versatility.

The success of many banks around the world is for the fact that their marketing

department realizes the products and services suitable to each segment of customers.

When implementing services or products, the marketing department firstly should

define the core needs of its customers, create the specific image of the products and

services to stimulate customers’ demand. This is also the basis for customer to

distinguish the banks from the others. Then the bank should seek to increase the

additional characteristics to create a collection of utilities, the benefits that can better

satisfy diverse needs of customers than competitors.

2.3.2. PRICE

Pricing in banking relates to the interest rates paid by the bankers on deposits, interest

charged by the banker on loans and demand draft, charges for various types of

transactions and fees for certain services.

In the formulation of marketing mix, the pricing decisions occupy a place of

outstanding significance. The pricing decision includes the decisions related to interest

and fee or commission charged by bank. Keeping in view the level of satisfaction of a

particular segment, the bank has to frame the pricing strategies.



The banks are required to frame two-fold strategies. Strategies concerned with interest

and commissions to be paid to the customer and interest and commissions to be paid by

the customers for different types of services.

2.3.3. PROMOTION

Banks promotional activities have several dimensions like building of image and

reputation, differentiate from competitors, generate interest and knowledge, attract

new customers and generate customer loyalty. To achieve these objectives the banks

develop promotional strategies and tactics, which utilize the usual mix of advertising,

sales promotion, public relations and personal selling.

Financial services are getting more and more complex and there are many of them to

choose. Banks can market current account, savings and fixed deposit accounts without

sales people. But in the case of complex financial services such as portfolio

management, mutual funds, factoring etc. requires interactive dialogue by sales

people. Thus there is a real need for developing an ongoing professional and proactive

sales program in banks.

The role of advertising in banks must be to complement personal selling and not to

substitute. Best financial service advertisers will attempt to pave the way for sales

people in three ways. It promotes the bank, bring more credibility and send messages

to market segments.

Public relation strategy will help to publicize a bank and its services so as to maintain

favorable images and credibility.

Of late banks are practicing relationship banking, where customers are viewed as

clients and emphasis is to retain than acquiring new customers. The rationale behind

relationship banking is to transform single-service users in to multi-service clients and

indifferent customers into loyal clients.



2.3.4. PLACE

The place decision mainly deals with selection of a suitable location for the branch.

Sound location decisions help in activating the business. The location should have

adequate availability of transportation, communication, electricity and other necessary

facilities for the smooth functioning of the banks. Technological development,

increased customer satisfaction, inadequacy of the traditional challenge to serve all

customer segments have brought about ATM, tele-banking, home banking, Internet

banking and now SMS Banking. Another significant development is a strategic alliance

set up by the private banks to overcome the handicap of limited branch network. In

such alliance the branch network of one branch will be used by the other for selected

transaction like bill collection, cheque collection, etc.

2.3.5. PEOPLE

Banking products cannot be separated from the person (banker) who markets them.

The product and the seller together constitute the banking product. Banks should adopt

internal marketing in order to make the whole business customer-oriented. The bank

products should be marketed to the employees first before they are marketed to

customer. The corporate mission should be communicated repeatedly and effectively to

all employees by the top management. The placement policy should emphasize that the

recruits should not only be conversant with all aspects of banking businesses but also

have the skill for social interaction and tolerance for interpersonal contact. The quality

for banking sector is an aggregation of all the properties, which are found essential for

generating the efficiency and projecting a fair image. Even efficiency essentially is

supported by ethical dimension, humanity and humanism.

The development of human resources makes the way for the formation of human

capital. Human resource can be developed through education, training and by

psychological tests. Even incentives can inject efficiency and can motivate people for

productive and qualitative work.



2.3.6. PROCESS

It involves all activities right from the product conception stage, to product designing

and development down to its marketing at the branch level.

Flow of activities: There has to be adherence to certain rules and principles in the

banking operations. The activities have been segregated into various departments

accordingly.

a) Standardization: banks have got standardized procedures, got typical transactions.

In fact not only all the branches of a single-bank, but all the banks have some

standardization in them. This is because of the rules they are subject to. Besides this,

each of the banks has its standard forms, documentations etc. Standardization saves a

lot of time behind individual transaction.

b) Customization: There are specialty counters at each branch to deal with customers

of a particular scheme. Besides this the customers can select their deposit period among

the available alternatives.

2.3.7. PHYSICAL EVIDENCE

The physical evidences include signage, reports, punch lines, other tangibles,

employee’s dress code etc. The company’s financial reports are issued to the customers

to emphasis or credibility. Even some of the banks follow a dress code for their internal

customers. This helps the customers to feel the ease and comfort.

Signage: each and every bank has its logo by which a person can identify the company.

Thus such signages are significant for creating visualization and corporate identity.

Tangibles: banks give pens, writing pads to the internal customers. Even the

passbooks, cheque books, etc reduce the inherent intangibility of services.

Punch lines: punch lines or the corporate statement depict the philosophy and attitude

of the bank. Banks have influential punch lines to attract the customers.



Most private and foreign banks like ICICI, Citibank and HDFC bank portray a new

look to the customers rather than drudgery banking counters. Attractive brand names,

logos, symbols, etc. add to the customer’s perception of service quality.

A bank with proper marketing policy will ensure to meet its objectives. After chapter II

- Bank Marketing for individual customers, we have gained a basic understanding of

the marketing in banking, which would be basis for further studying the situation of

Bank Marketing activities towards individual customers in VPBank mentioned in

chapter III.



CHAPTER 3. THE CURRENT SITUATION OF VIETNAM ECONOMY AND

MARKETING ACTIVITIES IN VPBANK

3.1. The background of Vietnam current economy

2012 can be considered as a gloomy picture of economy for most countries in the

world. While USA is still struggling with the policies to deal with the financial crisis,

Europe crumbled with prolonged debt crisis. In Asia, China, the 2nd largest economy

in the world, is also slowing down with the decline in a series of growth target.

Obviously, Vietnam is not out of this spiral when facing many challenges to find a

solution for the problem of growth in 2013.

Figure 2: Vietnam GDP growth rate from 2010 – I/2013

Source: Tradingeconomics.com

3.1.1. The stock market set a new bottom

The unfavorable factors both in micro and macro economy made most listed

companies get into trouble during 2012 right from the beginning. On 6th November,

Vietnam's stock market set a dissapointed record when HNX-Index reached its lowest

level in 12 years of existence in the market (50.7 points).

In order to increase transaction values and stimulate the development of the market,

the State Securities Commission of Vietnam has agreed to lengthen the traded time

until daily 14.5 pm in HNX and HSX from 5th March. However, these efforts have not

brought any positive results yet: low-value transactions, poor performance of stock



companies, layoffs and cut down on salary and bonus. Securities used to be one of the

sectors offering the highest bonus in its peak period of the years 2006 and 2007, but at

the present, many securities companies have to owe their staff salaries during the past

year.

3.1.2. The slump in real estate market

According to the statistics, the inventory of real estate market is up to 70,000

apartments in HCMC and Hanoi, not including a series of villas, land in many other

cities across the country with values approximately 300 trillion VND. These figures

reflect the slack status of the current real estate market. Investors have tried every way

in order to stimulate the demand, but they did not work.

The reason first stems from the rampant investment without practical and feasible

plans. Most businesses and organizations rush to “pour money” into real estate aiming

at middle and senior segment. At the same time, a huge amount of this type of goods

was produced, even in Hanoi was able to solve the housing problem by 2050.

However, as investors and speculators pushed prices up too high, inconsistent with the

actual affordability of the majority of the people, real estate has never got difficult as

in 2012.

Although the real estate market in Hanoi and HCMC have noted the strong decline in

all segments in 2012, then the price is still far from the affordability of those wishing

to make home-buying in, so in 2013 market likely to adjust downward until they reach

their real estate prices reasonable.

3.1.3. Disorder in gold market

The introduction of Decree 24 on the management of gold trading activities as a tool to

control the gold market, limit the difference between the world price and the home

price with the purpose of removing gold speculation and smuggling.

However, after officially taking effect on 25th May, the gold market goes against law-

makers’ expectations. Accordingly, SJC gold – the brand of state widened the gap with



world prices, fluctuating at around 3 million per tael. But in the last days of 2012, this

gap has to be loosened up to 5 million VND per tael. Then, domestic prices became

more and more optimistic with the world price even as government took actions.

3.1.4. Banking sector sinks into troubles

“Interest group” still exists in Vietnamese banking system. Some commercial banks

are hold and controlled only by a few people in a family in many different forms.

Cross-ownership situation also exists as a major problem of the current commercial

banks. The owners of this bank may establish subsidiaries, make a contribution and

ownership participation in other bank’s operation. This creates a negative situation,

which the banks conceal together to circumvent the regulation of credit and banking

activities and gain illegal profit.

Besides, bad debts are also emerging as a potential danger of the economy. So far,

each of the organizations release different figures of bad debt. According to banks’

self-reports, the total bad debts fell to about 100 trillion VND; however, this figure by

the State Bank is approximately 202 trillion VND. The ambiguity of the figures makes

this situation becomes more complicated.

3.2. Introduction of VPBank

Vietnam Prosperity Joint-Stock Commercial Bank (formerly known as VIETNAM

JOINT-STOCK COMMERCIAL BANK FOR PRIVATE ENTERPRISES (VPBANK) was

established under the business license No. 0042/NH GP issued by the Governor of the State

Bank of Vietnam on 12 August 1993 with an operation period of 99 years. The initial

charter capital was VND 20 billion. Since then, VPBank has increased charter capital

several times in order to meet its growing demand. The current charter capital of

VPBank is VND 5,050 billion.

Aiming to optimize work effectiveness and solidarity among all members, VPBank is

coordinating with consultants to create its unique corporate culture to embody the six

following core values:

1. Customer focus



2. Productivity

3. Ambition

4. People development

5. Trust

6. Making the difference

As the foundation of VPBank’s corporate culture, these six core values are extensively

communicated that help guide the behavior of each and everyone in the bank towards

these desired standards. These core values are widely introduced throughout the

system that empowers VPBank in its solid steps into the next phase of development.

Despite the difficulties from the economy and changing policies which are objective,

VPBank will continue to expand and develop its network in 2013, an important year

for acceleration in the Bank’s five year development plan to 2017 in order to build

stronger competitive advantages and improve its organizational structure.

3.3. The SWOT of VPBank

The study applies SWOT model (stand for STRENGTHS, WEAKNESSES,

OPPORTUNITIES & THREATS) to critically analyze the current situation of

VPBank.

3.3.1. STRENGTHS

A - Organizational structure

On August 24, 2011, VPBank officially announced the new organizational structure to

build a more effective mechanism to meet its demand for expansion. In particular,

sales divisions and distribution channels were independently set up from business and

support divisions with a view to better serve the customers of various segments.



Figure 3 : VPBank’s organizational structure

(Source: VPBank’s Annual report 2012)

B - Qualified staff

By 31 December 2011, the total number of professional employees of VPBank reaches

over 3,000, over 92% of them are under 40 and about 80% of them hold undergraduate

and graduate degrees. This is VPBank’s advantage to apply advanced technology into

banking activities.



As coming to conduct transactions VPBank, customers will be impressed by young,

enthusiastic and friendly working environment. VPBank staff are always:

- Responsible for clients

- Keep its reputation with customers

- Respect and serve customers with all their enthusiasm

VPBank tries to build up a strong and distinctive corporate culture, with the guidance

of top experts in Vietnam, in order to link all members of the Bank to a common goal.

C – Diversified products and services

VPBank offers a wide range of products and services with various benefits for clear

distinction of three specific customer segments: individual customers, SME customers

and big customers.

For personal customers:

- Providing Current Account and VPSuper Account

- Savings Account: Accumulative Savings, Prosperity Savings with Floating Interest

Rates, Online Savings, etc.

- Issuing cards: Autolink Card linked with payment account T24, Vietnam Airlines –

VPBank Platinum MasterCard, Platinum Credit Mastercard

- Loans: Loans for overseas education, Personal Installment Loans with Collaterals,

Loans Secured by Valuable Papers Issued by VPBank, etc.

- E-banking service: SMS Banking, Internet Banking, E-commerce service.

For SMEs:

- International Payment: Import L/C (issuance, amendment, payment), Authorized

Import Collection, International Remittance

- Trade finance: project financing package, Finance for Distributors/ Agents, Import

L/C Finance

Cash Management: Cash Pooling, Authorized Collection over the counter, Domestic

money transfer.

- Loans: SME Car for Business, Money claim by guarantee, Guarantee

Verification, etc.



For Corporate:

- Services & Trade Finance: Documents Collection (Documents against

Acceptance, Document against Payment), Loans for Import, Issuance of Import

L/C

- Financial Market Products: Foreign Exchange Forward, Interest Rate Swap,

Foreign Exchange Swap.

- Guarantee: Performance Guarantee, Tender Guarantee, Shipping Guarantee.

- Programs: Full Package Project Financing, Distributors/Agents Financing, etc.

D – Stable base of customers

The current VPBank’s precusor is Vietnam Joint – Stock Commercial Bank for Private

Enterprises, which targeted to serve SMEs and individual customers; therefore, they

continuously expand their network, branches and trading offices as well as develop

products and services targeting this segment. This share provides VPBank with stable

base of customers that builds up enlarge its potential clients.

3.3.2. OPPORTUNITIES

A – Potential market

Vietnam has a young population structure with 88.87 million people by 2012, in which

52 million is in working age. This is the group of potential customers, who has

income, storage needs and the wants of using banking products.

The number of students specializing in finance and banking sectors is huge, and their

quality is more and more improving. VPBank can take advantage of "gray matter" in

order to further promote the available products and services.

B – Facilitating capital and Innovation in technology

Economic integration facilitates capital, technology and personnel training, develops

comparative advantages of VPBank to come up with required international

competition, expanding markets abroad.



VPBank learns a lot of experience on management experience, banking services and

products quality from foreign banks.

3.3.3. WEAKNESSES

A – Promotion policy

There are not many forms of promotion and brand promotions. Marketing activities

are mainly awarded and give special gifts to customers.

VPBank’s website has not been given much attention. Some functions such as online

consultants are limited, which cannot meet the customers’ demand immediately.

B – Low scope of capital

According to Reuters’ data and financial statements of banks in 2012, Techcombank

has the largest total assets in private sector and Agribank does among state banks.

VPBank ranks eight among listed banks with VND 98,000 billion in total assets.

Bank Total Assets Charter Capital

Agribank 560.000 29.605

VietinBank 503.606 26.217

BIDV 484.696 23.012

Vietcombank 484.696 23.174

Techcombank 179.732 8.848

ACB 177.011 9.377

Military Bank 175.612 10.625

VPBank 98.000 5.770

Table 1: Total assets and charter capital of some banks by 2012 (unit: billion dong) (Source: From banks’ annual reports)



3.3.4. THREATS

A - Competition pressure from foreign and domestic banks

The integration of financial markets will increase the number of banks with strong

financial resources, technology, management skills, which makes increasingly

competitive pressure.

Currently, Singapore's OCBC (Oversea-Chinese Banking Corp) Bank is the only

strategic partnership. While other banks has signed a strategic commitment about

contribution, products and services with large corporations and domestic banks and

foreign financial institutions.

B - Pressure to improve legislation, monitoring mechanisms and risk

management

The domestic legal systems are incomplete, inconsistent, many shortcomings still exist

compared to the requirements of international banking integration.

Economic integration enhance international capital exchange as well as risks of the

banking system, while the management mechanisms and system of banking

information supervision are still very primitive, not in line with international practices.

In response to the difficult period, the government decided to tighten both monetary

and fiscal policies and take bolder measures. The SBV applied a ceiling interest rate

on both domestic and foreign currency deposits mobilized by credit institutions from

their customers. It required credit institutions to apply demand deposit interest rate for

customers with early withdrawal and limit the scope of foreign currency lending by

credit institutions.

In late November 2011, the SBV loosened the regulations on real estate loans. With

the removal of four items from the non-production sectors list, banks could easily

reach the percentage of non-production loans of 16% at the end of 2011.

In 2011, the SBV also introduced measures to strictly control quasi-lending investment

activities and limit the licensing of new branches.



C – Uncertainties of economy

The difficulties and challenges of 2012 were tougher than expected: prices of food,

crude oil and raw materials jumped sharply in the world market; stock market plunged;

public debt crisis were witnessed in many countries; the world economic growth

slowed down while inflation continued to accelerate in Vietnam. These uncertainties

in the world economy exerted negative impact on the Vietnam economy.

The local economy faced high inflationary pressure resulting in high interest rates.

Gold prices fluctuated dramatically while production activities suffered from various

difficulties; the real estate market was nearly frozen; macroeconomic instability

became a major challenge.

3.4. The marketing strategies of VPBank

In the current market economy, Vietnamese commercial banks are competing fiercely

to win their market. In this economy context, VPBank chose the right path, which is

consistent with the ability of the bank targeting not only the small and medium

enterprises and individual clients but also corporates, with the goal of becoming "one

of the five leading retail commercial joint-stock banks in Vietnam". VP always applies

flexible marketing policies in each period to meet customer needs.

The study analyzes VPBank’s typical products in addition to the marketing strategies

that are applied to create their distinctions such as policies in people, distribution,

physical evidence, etc.

3.4.1. PRODUCT POLICY

VPBank provides currency trading and its banking services such as mobilizing capital

(receiving deposit from customers) in VND, foreign currencies; utilizing capital

(offering credit, contributing capital, joint venturing) in VND and foreign currencies;

providing intermediary services (domestic and international payments, treasury

services, overseas remittance and fast remittance via banks); conducting trading in

foreign currencies; issuing and providing payment services for credit cards, debit

cards, etc.



To better meet customer’s needs, the Retail and SME Banking Division has designed

and launched various new products, consolidating sustainable relationship with

existing customers while attracting new customers as well.

Capital mobilization activities in 2011 faced with difficulties due to fluctuation in

interest rates and severe competition among commercial banks. New products like VP

Super Account, Online Saving, Foreign Currency Saving Account namely Prosperity,

Floating Saving Prosperity, Accumulative Prosperity Saving, etc. have helped stabilize

capital mobilization activities of VPBank. The VP Super Account, a package product

includes current account, ATM card, Internet banking and SMS banking services. The

product has attracted numerous customers.

The Bank has designed and launched mechanism, policies and better products for

individual customers, especially namely Over – one – month Flexible Savings. This

strategic product was specifically designed for individual customers. This Service

offers customers highest autonomy and best interest rate. This Service also allows

customers to withdraw principal partially and receive interest payment based on the

actual deposit time, the remainder of principal will be maintained.

VP Super Account is a whole personal account package with modern banking facilities

to help customers to manage the account efficiently, conveniently and safely. The

package includes: Flexible Current Account, ATM card with high limit, Online

Banking Service - Premier Package, SMS Banking Service - Premier Package.

VP Super Account brings many benefits to customers such as:

- Maximum saving with no fee of package opening including account, card and

service application; no transactions fee (money deposit/withdrawal, internal/

interbank transfer), Internet Banking, SMS Banking fees.

- Maximum Convenience with support in transactions over the counter, transactions

via SMS Banking, Internet Banking... with the highest transaction limit.



These are only two of various new typical products as an illustration of VPBank’s

continuous effort to make improvements and innovations in their products to better

satisfy their customer demand.

VPBank’s products will be a set of different features, functions and satisfy diverse

desires of customers. The co-brand card “Vietnam Airlines - VPBank Platinum

MasterCard” is an example, which still makes sure three levels of a banking product.

Core products

The co-brand card “Vietnam Airlines - VPBank Platinum MasterCard” is designed

exclusively to fit with high-class lives of elegant and triumphant customers. This card

not only helps customers make convenient payment anywhere, anytime but also offers

customers with a mechanism to exchange any spending with MasterCard for attractive

flight miles.

- Customers can accumulate GLP air miles as exchange for every spending with

the card.

- Credit limit up to VND 1 billion, which allows customers to enjoy a number of

luxurious and first-class services.

- This card uses the chip technology in compliance with the EMV standard in

order to reduce card frauds.

Tangible Products

The co-brand card “Vietnam Airlines - VPBank Platinum MasterCard is the card for

high-class customers and luxury consumers who frequently go on business, tourism.

The name itself reflects the high – class of cardholders with the well – known brand

(Vietnam Airlines). Moreover, cards are designed with luxurious and elegant style. It

is the important base for customers to identify, distinguish and select products and

services of VPBank, instead of that of other banks.



Additional Products

Cardholders of Vietnam Airlines - VP MasterCard also can enjoy luxurious offers

from VPDiscovery program in the high-class hotels, restaurants, spa such as five-star

hotel chains Victoria, Furama, Palm Garden; the leading fashion brands like Chicland,

Vania; restaurant chain such as Seoul Garden, Thai Express, King BBQ, etc.

In addition to making domestic and international payments with a high limit, safety

and security, the cardholders also enjoy the world-class experience from VPBank,

which accumulate points in exchange for free air tickets and the chance to upgrade to

business class to any location in the world.

3.4.2. PRICE POLICY

Prices are expressed in the form of interest, fees and commissions. Interest rates are

adjusted in line with the changes of market interest rates. This shows the flexibility

and responsiveness of VPBank’s business.

Currently VPBank applies rates for deposits, savings deposits normally are:



Marturity VPBank Interest (%) Techcombank Interest (%)

VND USD VND USD

Current account 2.00 0.50 0.50 0.10

1 month 7.50 2.00 6.85 2.00

2 months 7.50 2.00 6.85 2.00

3 months 7.50 2.00 6.85 2.00

6 months 7.50 2.00 7.05 2.00

12 months 9.50 2.00 8.85 2.00

24 months 9.50 2.00 8.85 1.55

36 months 9.50 2.00 8.85 1.55

Table 2: Interest rates and the savings deposits (interest paid at maturity) 19/05/2013

(Source: VPBank’s website and Techcombank’s website)

For deposits, banks offer different interest rates based on maturities in order to

encourage depositors with long-lasting commitment to the bank. Compared with the

interest rates of different banks, interest rates are competitive. This is the reason why

VPBank usually gains interest from customers.

For loans, in order to express their gratitude and support customers in making

consumer plans, business, VP Bank launches program in which loans with super

preferential interest rates for individual customers are offered from 2nd May 2013 to

30th June 2013. Accordingly, consumer loans for house purchase, home repair and

construction, car purchase, business investment, etc. VPBank will offer preferential

interest rates from only 6% per year, the maximum loan value of each loan up to 5

billion VND.



A special feature of the program is that many options are suggested for customers.

Specifically, customers can choose the interest rate of 6% per year during the first six

months, applying for a loan with a minimum time commitment of over 24 months, or

9.99% in the first 09 months for house purchase, home construction and repair, 9.99%

in the first 06 months for car purchase; or 9.99% in the first 03 months for business

loan.

At the same time, Techcombank announces reference rate of 10,69 % per year for new

personal loans which were approved from 3rd May 2013.

For the fees: the current fees are lower than other banks, so VPBank should adjust to

reasonable levels. For example, open a new account will not charge at VP Bank, but

other banks like Techcombank will charge customers 100,000VND for personal

accounts.

3.4.3. PLACE POLICY

Branch: VPBank opened various new branches. By December 31, 2012 VPBank had

205 branches in operation throughout the country. VP Bank's ATMs are also mainly

located in the major cities in order to meet the needs of the growing trading customers.

Branches are built in the favorable position of traffic and crowded residential areas.

This would be a very favorable transaction for all customers at home and abroad,

especially in developing foreign exchange operations as many tourists to visit Vietnam

every year.

ATM: 58 newly installed ATMs, increasing to 291 in total by end of 2012. This figure

rises 25 % compared to that in 2011

POS: Successfully linked to Banknetvn and VNBC via Smartlink. This connection

allows VPBank customers to use card to make payment at 50,000 POS of 29 member

banks of Smartlink-Banknetvn-VNBC nationwide.

The bank also transformed its management and business operation from geographic

into economic-zone structure. This transformation helped create an appropriate



business strategy and adapt the bank’s unique business environment to each area.

Region Branches Trading Offices & Savings

Hanoi 6 56

Ho Chi Minh 2 36

The North 11 29

North Central 6 26

South Central & Central Highlands 5 12

South East 3 2

South West 6 5

TOTAL 39 166

Table 3: Number of VPBank branches and Trading Offices & Savings by 2012

(Source: VPBank’s Annual Report in 2012)

3.4.4. PROMOTION POLICY

This is one of the most effective marketing policies applied VPBank. Marketing

activity is indispensable for any business operating in the public sectors.

A new product was launched with the advertisement plan on mass media as well as

through attractive banners hanging outside branches or trading office. For example,

VPBank cooperated with Western Union to launch the promotion “Spring Reunion,

Tet Gatherings” from 1st January to 28th February 2013. Accordingly, fund receivers of

Western Union at any VPBank transaction office nationwide got a lucky scratch card

for each transaction performed during the promotion period. These scratch cards shall

be redeemed immediately for various attractive prizes including 03 trips to Korea, 15

trips to Malaysia – Singapore and more than 20,000 in-kind or cash prizes.



Marketing today includes offline marketing and online marketing (Internet marketing),

in which online marketing is becoming increasingly important as the number of

Internet users is rapidly increasing. In Vietnam, this figure is 31.1 million by July

2011, an increase of 24% over 2010, accounting for 30% of Vietnam's population.

This number of Internet users has become the target customers of many businesses,

including banks. VPBank is also aware of the importance of online marketing

through onsite Marketing which immediately understand the bank's website. A website

is an effective tool to meet the information needs of the customer at any time and

anywhere. The interface and layout of the website are logically arranged and attractive

with the VPBank’s colors (green and red). Content of newly products and services and

information about events and promotions are shown in front page to attract the

attention of customers. Customers also can find records and application forms on

VPBank’s website, instead of taking them at trading offices or branches. This helps

time – saving for both the bank and their clients.

VPBank always make efforts to gain social recognition through many meaningful

events. This affirms VPBank’s image in customers’ mind, which brings the bank more

than profit. VPBank Securities Company (VPBS) is Platinum Sponsor for Charity

Program “Hanoi Run For Children 2012”. “Hanoi Run For Children” is a meaningful

charitable program, held annually in order to raise money for disadvantaged children

suffering from cancer and heart diseases in Hanoi. In the spirit of a good – will for

community health and advanced society, VPBS looks forward to building a healthy,

civilized community with strong healthcare system. Moreover, in 2012, an exchange

event called “Students and Integrity” was held by the Youth Union of Hue University,

in which VPBank was the major sponsor. At the event, students had chances to listen

to economic experts’ sharing about their experiences and useful knowledge regarding

student’s majors and social knowledge, which helps students gain adequate

information and take bold steps into the future.



3.4.5 PEOPLE POLICY

On 10 September 1993, VPBank officially started its operation with only 18 staff

members at No. 18B Le Thanh Tong Street. The number of VPBank's staff has

increased in line with its growth and expansion of operating network.

By 31 December 2011, the total number of professional employees of VPBank reaches

over 3,000, over 92% of them are under 40 and about 80% of them hold undergraduate

and graduate degrees.

Recognizing that the quality of employees is the strength of the bank, VPBank has

always paid attention to enhancing its human resource management. Internal and

overseas training courses are regularly held by VPBank to improve the professional

qualification of its employees.

The project of comprehensive service quality improvement (Service 100+) was a

training/supportive program for service quality at VPBank in order to build up a new

image of VPBank as more professional, dynamic and friendly. The program was

designed to retrain on products, process, sales attitude and how to gain the best quality,

and the best image of teller team.

Products: The program has been redesigned systematically to help staff better

understand the products of VPBank and competitors.

Services: The program focused on service quality and how to make a positive

difference for customers.

Encouraging policies: The program systemized the remarking process and

bonus at branches including index of non-financial work effect, building a

professional working team that represents VPBank culture.

Mystery shopping project helped review all branches over 7 big cities and provinces

including Hanoi, Ho Chi Minh City, Hai Phong, Thanh Hoa, Hue, Da Nang and Can

Tho.

According to the assessment of mystery shopping project, service quality of VPBank



in 2011 was positively improving with high customer satisfaction. This also helps

VPBank assess their staff regularly in order to improve their performance and working

attitude.

Figure 4: Average measurement of Teller Service Quality in VPBank in 2011

Source: VPBank’s Annual report 2011

3.4.6 PROCCESS POLICY

In 2011, the Process Supervisory Department set up Quality Commitment for 20 Head

Office’s divisions under the direction of CEO. This was to create a service quality

standard at Head Office’s divisions and aimed to improve the customer satisfaction.

After a year of deployment, Service Level Agreements (SLAs) was the foundation of

quality service culture across Head Office‘s divisions.

Figure 5: Operating time before and after the project Service Level Agreements

(Source: VPBank’s annual report 2011)



In 2011, the Process Improvement Department changed 4 at-the-counter processes

including opening savings, current, corporate and secondary account. As stated in the

chart, time for processing transactions all shorten significantly after project. This

improvement helped time saving and eliminate redundant steps for tellers, supervisors

and customers.

3.4.7. PHYSICAL EVIDENCE

With the business plan targets annual growth of 20% - 50%, the size of the

departments at the Head Office and its organizational structure must also change

correlatively to meet the needs of bank’s management. Therefore, banks need a new

headquarters, which is large enough to meet not only current needs but to the growth

demand in the next 3-5 years. Therefore, VPBank decided to relocate its headquarters

from 8 Le Thai To (Hoan Kiem District) to floor 1-7 Capital Tower at 72 Tran Hung

Dao street (Hoan Kiem District).

3.5. The achievements of Marketing strategies in VPBank

VPBank is on the way to assert its position, expanding its business scope; the public

has gradually come to know through photos VP mass media, business results improved

over the years recently. By marketing and more customers use the products and

services as well as how to use a reasonable cost, the performance of the 2005 Hanoi

branch very positive results.

Thus, the criteria for funding and loans are rising sharply next year as compared to last

year:

3.5.1. Deposit mobilization activities

Deposit mobilization activities of VPBank suffered from severe competition,

particularly in the last months of 2011. Deposit reduced for a while and leveled off at

the end of the year. Still, deposit mobilization activities remained stable and showed

better growth than last year. As of December 31, 2011, deposits from customers were

VND29,412 billion, an increase of VND5,442 billion or 23% against last year.



Deposits and loans from credit institutions went up by 86%, from VND 13,782 billion

at the end of 2010 to VND 25,588 billion at the end of 2011.

VPBank continued to issue valuable paper in the year of 2010 and at the end of 2011,

the balance increased by VND 5,411 billion, which was equivalent to 56% as

compared to previous year that reached VND 15,042 billion.

The total mobilized capital by end of 2011 reached VND 71,059 billion, increasing by

46% as compared to the previous year, which was equivalent to VND 22,340 billion.

Table 4: Deposit mobilization structure in 2010 – 2011 in VPBank


Figure 6: Deposit mobilization from customers in VPBank from 2007 – 2011




3.5.2 Credit activities

Credit and investment activities have encountered difficulties in changing the targeted

customers since the Resolution No. 11/NQ-CP and Instruction No. 01/ CT-NHNN of

the SBV were issued. With features of a retail bank that serves small and medium

enterprises as well as individual customers, loans to individual customers account for a

considerable proportion including mortgage loans and car loans and other personal

loans. Almost non-production loans were long and medium term; therefore, it is

difficult to quickly reduce the ratio of non-production loans as required by the SBV.

In this context, VPBank adjusted several business targets to adapt the situation, in

which credit growth was reset within 20% to meet the SBV’s requirement. The total

outstanding loans at December 31, 2011 were VND 29,184 billion, increasing by 15%

or equivalent to VND 3,860 billion, adapting the credit growth roadmap and putting

the non production loans proportion to below 16% credit growth as required by the

SBV. High interest rate creates difficulties to enterprises and interest rate cut also had

significant impacts on profit of commercial banks.

However, in response to the policies of the Government and the SBV, VPBank offered

designed supportive packages with interest rate ranging from 17% to 19% which have

proved effectiveness for agricultural, forestry, and aquatic producing and exporting

companies. Together with ensuring reasonable growth, the Bank also paid special

attention to credit quality, loan control and credit classification, provision for credit

risks as required by law. At December 31, 2011, bad loan ratio was 1.82%, matching

the target of under 2% and well below the average bad debt ratio of other banks.



Figure 7: Outstanding loans to customers in VPBank from 2007 – 2011


VPBank’s Return on Equity (ROE) was 16.36%, a decrease by 6.29% from 2010. Its

Return on Assets (ROA) declined slightly to 1.09% as compared to 1.15% in 2010 due

to sharp increase in total assets.

Figure 8: Some financial indicators in VPBank from 2007 – 2011




3.5.3 Customer satisfaction

VPBank has been awarded the title "Bank with the most satisfactory service quality"

by Vietnam Economic Times in Ho Chi Minh City on November 4, 2012. Voting

program for the service of Trust & Use has been launched annually by Vietnam

Economic Times based on direct surveys and opinion polls of readers of various

publications, namely: Consumer Advisory Magazine, The Vietnam Economic Times,

etc. This year's voting program, held for the fourth time, is based on the aquisition of

feedbacks from readers on three criteria: quality of products/ services; after-sales

services, choice and future plans of consumers regarding purchases and use of

services, consumer products.

Being voted the best bank for satisfactory service quality has affirmed the advantages

of VPBank's product and service quality, its position in customers' hearts, at the same

time, a valuable source of customers' encouragement. VPBank, therefore, could make

constant efforts in improving service quality, diversifying product ranges, expanding

the service network, and further promoting the advantage of being a modern

commercial bank in Vietnam.

3.5.4. Awards

In 2011, the Bank earned many valuable prizes including: Excellent Brand Award in

2011; Global Payments Excellence Award given by Citibank and Bank of New York;

Top 100 Reliable Services and Products; Top 500 Vietnam Largest Enterprises

(VNR500); Top 500 Fastest Growth Enterprises (FAST500); Enterprise of

Community, Products and Services for Community, Entrepreneur of Community.

3.6. The problems of Marketing activities in VPBank

Taking use of many advantages both objective and subjective in the market, many

commercial banks and joint – stock banks have made great progress over VPBank.

The banks are really focused on customers, proactively designing modern products

and services in accordance with customers’ demand and the development trend of the



world economy. Until now, VPBank has made certain achievements, however, the

existing restrictions still need to be overcome:

3.6.1. PRODUCT

No product brings VPBank’s typical "impression". Only recently are new banking

products launched such as VP Super Account, Vietnam Airlines - VPBank Platinum

MasterCard, Accumulative Savings, Household Business Loans, etc. The products of

VPBank are not as various as other joint-stock commercial banks such as:

Techcombank, Sacombank, ACB, Eximbank, VIB, etc. The products and services are

quite traditional and not linked with modern technology. On the other hand, bank

products are not named to distinguish with the same products of other banks, thus

causing less attention and customer care. For example, Techcombank offers a wide

range of savings products with impressive name such as: Boi Thu Savings, Phat Loc

Savings, Tai Hien Savings Account, Tai Tam Savings Account, etc.

With the same segment of customers, VPBank has no specific business strategy to

create product differentiation (price, service time) from other banks.

3.6.2. PRICE

The interest rates are not different between residents or organizations in order to

stimulate deposit activities of each object.



Table 5: Interest applied for Phat Loc savings in Techcombank

(Source: Techcombank’s website, 2013)

As stated in two above tables, with the same product to individual customers, while

Techcombank offers different interest rates based on the amount of deposit and

geographic regions, VPBank doesn’t. This can limit the customers’ willing to deposit

as they have to choose between VPBank and the other bank.

3.6.3. PLACE

VPBank was establish for a quite long time, but compared to the state-owned

commercial banks, the bank is limited in network operations as well as experience in

the retail market, including individual customers. This can be clearly seen by the fact

that VPBank is lack of service delivery channels of retail banking, few branches and

transaction offices to better serve individuals customers, as well as the lack of

experience about products and management models to retail banking.



Region Branches & Trading Offices ATMs

Agribank 3359 1702

VietinBank 1272 1217

BIDV 644 1295

Vietcombank 381 1700

ACB 325 366

Techcombank 307 1205

VPBank 205 291

Table 6: Number of ATMs and Branches &Trading Offices by 2011

(Source: From banks’ annual reports and Western Bank statistics)

VP lacks a consistent policy for individual clients across the entire system, so the

customer management and development of retail products are also dispersal. In

VPBank, especially sub – branches, the credit department has not been divided into

objects for individual customers and corporate clients separately. This will interfere

the branch performance in marketing activities because an employee cannot

simultaneously take charge of two customers with the highest efficiency.

3.6.4. PROMOTION

Since its establishment, VPBank has carried out a lot of advertisement, sponsorship,

promotions, etc. but brings few results. The programs simply introduced the bank to

the public.

VPBank has not taken full use of mass media and online marketing tools. Some banks

successfully popularize their images on TV such as ACB, Maritime Bank, VIB,

HSBC… The impressive clips with beautiful melody in accompanied with their core

values impress and make the banks’ image become familiar with customers.



Although VPBank is aware of the importance of online marketing, they have not take

advantages of other tools beside website yet, say, S.E.O (Search Engine Optimization),

Support Online, Email Marketing, Social Media, Online PR, Promotion or Online Ad.

3.6.5. PEOPLE

Staff does not meet the professional requirement in retail banking, the customer

relationship management is not really closely and logical, so bad debts are still a

serious problem. Furthermore, the bank staff has no capabilities of cross – selling or

providing necessary advices to customers. Bank staff is young and enthusiastic, but

lacks experience. VPBank does not have potential and talented staff to prepare for the

bank’s expansion.

All in all, in a year of difficulties and challenges from local and global economies,

VPBank reaffirmed and demonstrated its strength in quantity and quality. With top

class consultants on strategy, again, the bank confirmed its position among the

leading banks in Vietnam with positive business results. However, the bank still faces

many challenges stemming from both inside and outside. VPBank should promote

their strengths to make use of opportunities as well as overcome their weaknesses and

existing problems.

After learning about the situation marketing activities towards individual customers at

VP Bank, the study would recommend a number of measures to promote activities.



CHAPTER 4. SUGGESTED SOLUTIONS TO IMPROVE BANK MARKETING

IN VPBANK

4.1. Setting a dynamic and effective competition strategy

Competition strategy needs to create the uniqueness of products and services. The

uniqueness will bring the advantages of the distinction, which is a key factor to attract

customers to the bank, but it must be practical or within the customer's perception. The

difference here is not necessarily to be created throughout the whole process of

providing products or services, but only involved in one related aspect. For example,

VPBank can make its distinction through advertising, especially VPBank’s brand

promotion. In fact, they have a newly strong brand.

The new brand of VPBank with the motto "Take actions for your dreams" is built up from the

four following personalities: professionalism, commitment, uniqueness and simplicity:

PROFESSIONALISM: using our knowledge and experience, together with a professional,

accurate and timely working style, we offer customers banking products and services that are

advanced, reliable and suitable to their specific needs.

COMMITMENT: we give out advice, guidance, and respond to customers' enquiries to help

them clearly understand VPBank's products and services.

UNIQUENESS: we always seek innovative ideas in order to create the uniqueness, thus

providing high quality products and services with lots of benefits to our customers.

SIMPLICITY: we focus on building our banking service systems with simple and convenient

procedures, relying on advanced technology to serve our customers in a timely and effective

fashion.

The new logo is a stylized image of a lotus in blossom, the symbol of Vietnam, implying

VPBank's desire of contributing to the sustainable, prosperous and perpetual development of

Vietnam.

The design of this logo indicates the image of hands holding a raising hope, implying the

nonstop improvement, which is a solid and reliable basis for development and prosperity.



The bright red color of the petals shows the enthusiasm, dedication to work, creativity,

prosperity, and luck as well as responsibilities for the community from every VPBank's

activity.

The clear and simple font brings along a modern look and feeling; besides, it implies the

distinctness in VPBank's activities. The smooth curves show the flexibility, commitment and

simple procedures. The green color shows a fresh vitality with a meaning of bringing

sustainable success to customers, as well as success and development of the bank itself.

Especially, letter "k" at the end of the logo shaped by upward red petal expresses VPBank's

determination to offer customers unique products/services with the best quality, the most

modern, professional and reliable style; with a desire to make customers' dreams come true

through our efforts. Together with the image of the lotus, the petal in letter "k" brings along a

feeling of the consistence in sustainable development and orientation of the bank, creating the

image of VPBank as a trustworthy partner and mutual development with customers.

However, competition strategy needs to clarify the importance of distinction in

banking products from its competitors. If making a difference is not enough, it is

important that distinctions bring the actual value to customers and are given the their

appreciation. Such a competitive strategy will bring efficiency to VPBank’s

performance.

Simultaneously, the bank needs to build flexible competition strategy in each period to

ensure that they always go ahead competitors. Therefore, banks should always strictly

follow the market moves, analysis changes in demands of products and services by

customers, especially individual ones who easily are affected by psychological factors.

In the banking sector, products and services are vulnerable to be copied by

competitors. Therefore, VPBank’s competition strategy should take this into account

to bring about measures against the copyright threats from the competitors. Solving

this problem also means that banks are gradually asserted its position in the market.

4.2. Developing product policies towards diversification and modernization

In the context of Vietnam economy witnesses the slump in other investment areas such

as gold market, real estate and securities market, banking seems to be a safe place,

which is favored by individual clients. Moreover, the income per capita of Vietnamese



is gradually rising. VPBank should quickly launch new products to take advantage of

the opportunities. This may be another form of savings accounts, loán or cards.

However, the current market has a lot of products of well – known and experienced

banks such as Connect 24 by Vietcombank, F@st Access and F@st Savings by

Techcombank, etc. with the dominant characteristics and attractive forms of

promotions. So this requires the further uniqueness, safety and distinction from

VPBank’s products, which is better than available products by other banks. At the

same time, the bank should enhance the development of new products based on

modern technology such as personal accounts combined with value-added services

such as payroll cards, statements, bill payment, investment products, asset

management, centralized capital management, co – brand cards, etc.; accumulate

savings, insurance savings, mortgage lending products, etc. This work requires the

efforts of VPBank, especially marketing department of the bank.

In the future, when the VPBank’s capital increases, ahead of over 1,000 billion VND,

the bank has more conditions for diversification and specialization of products. The

other joint – stock commercial banks like Techcombank, ACB, Habubank, etc. have

applied modern technology in providing customer services. When the bank offers

information technology, they can apply the basic addition products supporting for the

core products, which help reduce the travel time of the customers such as getting

account balance, transferring money, making bill payment, etc. through Internet

Banking at any place with Internet connection.

4.3. Adjusting price strategy in line with market moves

Prices of products and services are the main source of bank’s income. The price should

ensure both to be competitive with other competitors and covers all costs of the bank.

In such a competitive market, the current cost of the products and services between

banks has no clear difference, competition on price (interest and fees) occurs fiercely.

So, in addition to adjustments in accordance with market prices in order to attract more

customers, VPBank should add a number of additional services supporting for the core

products.



4.4. Developing distribution channels

For individual clients, VPBank must always pay attention to a system of diverse

distribution channels, enabling customers to make transactions anytime, anywhere.

Diversifying distribution channels is to harmoniously combine between the effective

traditional channels and modern one using modern information technology. This also

means diversifying customer choices. The highly developed technology more likely

has allowed banks to communicate with their customers in more effective ways,

resulting in a decrease in cost per transaction and transactions are conducted anywhere

at any time.

The reduction of transaction and operating costs, enhancing transactions and service

efficiency for individual customers is one of the main reasons for accelerating the

implementation of diversified distribution channels. And of course, the diversification

of distribution channels will expand the VPBank's appeal to wider public areas.

Bank may conduct diversified distribution channels by:

- Strengthen sales activities of the sales team.

- Develop specialized group serving customers in branches and transaction offices.

- Expand the network of branches and transaction offices, especially in the city center,

residential areas, etc. Branch will become an important factor in penetration strategies

of products and services. For banks, the physical appearance in the every street brings

customers the confidence and belief that their money is stored in a safe place. VPBank

also must create a friendly and polite environment as well as always maximize needs

of customers.

It is recommended to expand customer care centers and Internet banking, as well as

develop retail banking system: improve automated trading, Internet Banking, Phone

Banking, etc. Using modern information technology in banks in Vietnam today is

more and more popular. But the investment in information technology requires huge

capital sources, so VPBank should have an appropriate strategy and right investment

choice between modern or traditional distribution channels.

With card products, banks can design plan to place ATMs and POS at amusement

parks, supermarkets, recreational facilities and even the beauty centers, restaurants to



attract more customers. By this way, VPBank will confirm its position and popularize

its image.

4.5. Improving promote policy

VPBank can focus on increasing marketing strategies to potential customers,

frequently updating information about new promotion programs to customers, sending

greeting cards if possible. By the time, they will become sympathetic to VPBank and it

is a good time that they will transact with the bank and appeal more customers.

Suitable promotion policies for depositors with large volume and customer who makes

repayment for the loans on time will bring more benefits to the bank in the coming

time.

VPBank also should concentrate on further take use of online marketing tools, such

as S.E.O (Search Engine Optimization), Support Online, Email Marketing, Social

Media, Online PR, Promotion or Online Ad.

- S.E.O (Search Engine Optimization)

SEO (stand for Search Engine Optimization) is a set of methods to bring the website to

TOP 10 positions (first page) of the results pages of search engines. Currently, most of

the sites selected Google.com to deploy SEO as nearly 90% of global internet users

use Google and Google offers many tools for website owners to implement and

measure SEO effectiveness.

However, because SEO is also a new field to banks in Vietnam, there are currently no

specialized departments to perform SEO, so banks often use Google Adwords service

to replace SEO. To use the Google Adwords service, banks have to spend an expense

to be displayed at the top of the search results, if not, it will disappear. So VPBank

should be pioneer to deploy SEO, which is lower-cost than Google Adwords but

generate effectiveness in the long run. On the other hand, when searching on google,

customers are also easy to distinguish advertisement from the search results and

normally customers will trust in the search results better than commercials.



- ONLINE SUPPORT:

Online Support includes online chat and support via emails. Because many customers

want to keep secret of his transactions from colleagues, relatives, even his wife or

husband. Thus, customers often surf websites to find out information or personally go

to trading offices.

Online chat allows customers to make questions and freely learn about the bank's

products and services. With this tool, counselors can directly marketing about their

products and promotions quickly. But more importantly, this is the two-way marketing

tool in which there are exchanging information, giving and taking feedbacks between

clients and the counselors. In fact, the team to answer online customers’ questions is

often combined with consultants at the customer support center (contact center).

- EMAIL MARKETING:

Email marketing is favored by many banks today as this helps them reach the right

target customers. Banks can actively adjust the time to send and receive email as well

as commercialize (integrated website link), vary in its style and content. Otherwise,

email marketing saves at least 75% compared with other forms of advertising,

allowing customer leave their feedbacks and correctly measure effectiveness.

Email marketing should be sent once a week to make certain habits of receiving

emails, often called the weekly newsletter (Newsletter). The emails which are

indiscriminately sent will make customers uncomfortable, and these emails (spam

emails) may cause adverse effects.

The content of the emails is the most important issue needed careful research by the

bank. Currently, most banks only focus on email marketing to promote a new products

and services, but combine much more information about different products in one

email. The bank can logically arranged information on promotions, the highlight

utilities of products or add the bank’s news to promote its brand etc.



- SOCIAL MEDIA The social network (social media) is now no longer so strange to Internet users and the applying of social networks in marketing is becoming increasingly popular. Banks can create accounts on social media and make friends with many targeted customers, or you can create Fan page and try to attract more customers to participate. Once the bank launches promotions program or wants to convey a certain message, they simply insert the contents on the wall (wall), that information will immediately appear in the targeted customer's home page. - PROMOTION The online event is also a very effective way for banks to promote the bank image. By joining as a partner or sponsor for the online event (online auctions, online fashion fairs etc.) or organize their own online events, banks are able to attract the attention of Internet users. 4.6. Developing and improving workforce performance Staff are the key factor in the implementation of marketing strategy. To meet the development needs of banking, human resources is one of the significant issues needed top concerns. VPBank should develop their workforce both in quality and quantity, that is, qualifications, experience and enthusiasm. Marketing is the new aspect of the commercial banks in Vietnam for the past few years, so those who are well – experienced in marketing, especially banking sector are not sufficient. Thus, VPBank need training potential officers to implement marketing activities. The joint-stock commercial banks as Techcombank, ACB, Sacombank ... all have marketing departments, VPBank need to quickly set up the marketing department in branches in order to meet customer needs at highest level. VPBank should raise training programs in order to help staff further understand new products. Besides, banks can use the reward policy towards employees who have high productivity as well as creative ideas and incentives, which is combination of benefits, responsibilities and contributions, with the purpose of further enhancing their sense of working attitudes.



CONCLUSION

Vietnam 's economy continues to face many challenges, significantly affecting to the

banking and financial markets in general and VPBank in particular. In 2012 VPBank

carried out the most powerful and smart moves in the construction of important

foundation, creating momentum for the following period with ambitious growth. In the

context of the current economy, marketing is an effective tool for banks to attract and

maintain its customers base. Among business and management strategies, VPBank has

specially focused on marketing programs, which helps to ensure its powerful

development and sustainability in the future in effort to reach the goal of becoming

one of the Top 5 Commercial Bank and Top 3 retail bank in Vietnam by 2017.

After detailed research, I would like to offer some solutions to contribute to the

development of the bank based on enhancing their strengths and improving their

weaknesses. The solutions mainly follow the marketing mix tools concentrating on

strategies in Products, Price, Place, Promotion and People.

In conclusion, subject matter set out to solve is mentioned above. Due to the time

constraints and the student’s limited reasoning level, it is inevitable that shortcomings

still exist which needed to be completed by teachers, the bank’s managers and those

interested in this topic.



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