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Case Study - Marketing Fundamentals

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ING DIRECT ("ING-D") Case Study

Course: Marketing Fundamentals

Submission Date: 17th November 2009

Executive Summary

ING-Direct (ING-D) is a marketing orientated bank that has launched into established markets in the last decade using differentiation as a way to build competitive advantage.

This report splits into Section A, based on information provided by the 'ING Direct USA - Rebel With A Cause' Case Study by IMD International, and Section B which critically assesses the ING-D website.

Section A

The Nature of the ING-D's Value Proposition

Customer Value Proposition Creation

By engineering processes and products from the customer inwards, ING-D aimed to construct a customer value proposition that offsets perceived sacrifices with higher levels of perceived benefits in areas which resonate strongly with customers.

Value Proposition Summary

The key perceived benefits offered to customers are simple, easy to use accounts with no fees or service charges, no minimum balances, great savings rates, the convenience of 24/7 internet banking and quality service from an award winning call centre.

The perceived sacrifices are principally the physical evidence aspects of the service marketing mix that are associated with the traditional banks, including branches and ATMs. The other key perceived sacrifice is that ING-D does not offer a complete portfolio of accounts due to the lack of a Checking Account. Therefore customers potentially need to operate a number of accounts with different organisations.

The value proposition is supported through integrated marketing communications which utilise a range of tools and channels in addition to basic advertising, including sales promotion, events and online educational services.

The use of less traditional communication methods underlines the strategy of using differentiation for competitive advantage. It sets ING-D apart from the mainstream banks in brand personality.

Value Proposition Effectiveness

ING-D created a viable customer value proposition as evidenced by high levels of customer advocacy and the growth in customer numbers and deposit levels.

The Evolution of ING-D's Strategy Since its Launch in the US Market

Post-Launch Environment

The post-launch period saw ING-D US entering a period of significant growth.

At this time the bank was grappling with a range of challenges including pressure on margins, aggressive competitor activity, consumer confusion and increased internal reporting and control measures.

The marketing strategies employed principally focussed on evolving two key parts of the marketing mix; product and place.

Product Development

Post-launch ING-D chose to implement a product development strategy as per the Ansoff Growth Matrix (Appendix 1).

This can be seen in the period from 2000 to 2002 when a range of new products, such as Mortgages, Certificates of Deposit, etc, were launched into the existing ING-D US footprint.

Channel Development

ING-D traditionally operated a direct to consumer distribution channel. This had the benefits of maintaining control over the relationship with the customer ensuring that the brand values could be executed consistently.

However, to address its balance sheet issues, in 2005 the direct distribution channel was supplemented with the introduction of intermediary agents in the form of wholesale mortgage brokers.

Impact of Activity

Growth was achieved quickly with effective diffusion through the market resulting in ING-D becoming the largest on line bank in the US.

However, the rapid growth strategy resulted in a more systems and process based organisation and challenging the maintenance of its trademark entrepreneurial culture.

ING-D Competitors and the Evolution of Their Strategies.

Key Strategic Changes By Competitors

Considering Porter's Model of Competitive Industry Structure, we can see that with high barriers to entry, and limited opportunity for substitution, the main factor affecting ING-D has been in the form of competition from existing US banks, (Appendix 2).

Previously these banks had core strategies of targeting specific markets. They focussed on their main product offerings such as Checking Accounts, and on branch network service provision.

However, because ING-D's success many of the established banks implemented new competitor target strategies in which they went head-to-head with ING-D and the other new entrants, internet banks, which had been attracted into the direct market.

ING-D's competitors fall into two key groups;

Bricks & Mortar

The traditional banks such as Citibank & HSBC have principally eroded ING-D's unique selling propositions through the availability of high interest savings accounts.

They had the advantage of building on existing relationships and offer the convenience of being a one-stop-shop for customers. As holders of the primary checking relationship this has been a credible market position which has resulted in savings balances switching from ING-D.


Internet competitors have operating models more like the "no frills" approach adopted by ING-D.

The main competitive threat has been around interest rates but they also attacked ING-D's brand values and personality, such as the use of less formal



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