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TD Residential Express Mortgage
MARK 1031 Fall 2015Professor: Boucher, Laurence
Class: Tuesday 12 Noon Killner, Cynthia Makei, Dmytro
Sytnyk, IrynaTorres, Edgardo
Final VersionNovember 24th 2015
Outline
Page Section
3 Executive Summary
4 Background including SWOT
8 Goals & Objectives
14 Target Market / Segmentation
16 Product Strategy & Tactics
18 Pricing Strategy & Tactics
20 Distribution Strategy & Tactics
22 Promotion Strategy & Tactics
24 Budget Summary
26 Key Milestones
31 Timing: Blocking Chart (Appendix D)
32 Training (Appendix E)
33 Sources
2
Executive Summary
This one-year marketing plan for TD Bank has been created to introduce a new product in the Residential Mortgages category – TD Express Mortgage. Although TD has several options within this category, research has shown that there is an opportunity to expand TD presence on the market focusing on generation X and Y and attracting newcomers, through the positioning as the most simple, efficient and convenient loan for first-time home buyers.
Secondary research has shown that first-time home buyers need a special assistance with understanding the entire mortgage process. Moreover, they are demanding transparency in terms of fees and requirements in order to be eligible. Furthermore, the competitive analysis revealed that none of the competitors are currently developing a specific product strategy to meet particular needs of this segment.
We have created a Marketing Plan to share the results of our secondary research. First of all, the SWOT analysis identified as a main weaknesses lack of differentiation and the current perception of mortgages as a complex process. The recommendation to overcome aforementioned points will be increase efforts in training, customer service and communication initiatives. The product strategy will not focus only on interest rates. The positioning strategy will point out the customer centric and highly customized first-time buyer mortgage of TD to meet life cycle needs.
Our Marketing Goal is to achieve 20 000 Express Mortgage clients. We are planning to achieve this goal through the implementation of an integrated marketing campaign, which include: advertising, direct marketing, PR and Internet with an overall budget of $3,380,000. In addition, we will have several initiatives of research and training to understand needs and expectations of our target as well as to provide a superb customer service.
Lastly, the communication was divided into stages to present the order of the activities that will be implemented. Therefore, we will start our campaign by testing the product and communication in Manitoba, focusing mainly on Winnipeg for 3 months, starting from January 2016. After this step we will be working on the main finds in order to assure a successful national launch.
3
Canadian Mortgage Market Growth and Forecast
Province Average Household Debt Mortgage as a type of household debt, %
Average Income
Population (thousands)
Ontario $67,507 40% 76,510 13,677.7Manitoba $68,437 38% 72,600 1,280.2Alberta $124,838 53% 97,390 4,120.9British Columbia
$99,834 44% 74,150 4,638.4
Quebec: $59,805 46% 72,240 8,214.9Across Canada
$76,140 43% 76,550 35,543.7
Table 1.1: Overview of the market1
Chart 1.1: Canadian Residential Mortgage Market Growth2 Chart 1.2: Canadian Residential Mortgage Market Forecast
1 Statistics Canada website: http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil108a-eng.htmBMO official website: https://newsroom.bmo.com/press-releases/bmo-annual-debt-report-household-debt-up-6-per-ce-tsx-bmo-2014080509607700012
Canadian Association of Accredited Mortgage Professionals official website
4
Mortgage Market Overview
According to Canadian Association of Accredited Mortgage Professionals in Canada, the average household debt in Canada is $76,140 and is growing with slow pace, while Mortgages represent 43% of all debt.
Around 27% of all population (9.62 million Canadians) are home owners with mortgages amounting to 5.64 million. As can be seen in chart 1.1, the Canadian residential mortgages market has produced some good growth in recent years and it has stabilized at over 5% per year in 2015. While this is considerably slower compared to the pre-recession period, it continues to exceed the rate of growth of the broader economy.
Mortgage credit continues to expand relative to the economy and the total household income. Low levels of interest rates are driving the growth of the market, which means that Canadians are paying less interest and have more money available that they can use to repay their mortgage principals.
Furthermore, there are some factors that are applicable to forecast future mortgage market conditions, such as:• The trend of Canadians of moving to a place where they can find better job opportunities where the cost of housing is higher
and larger in relation with mortgages is expected to continue in the next years.• Low rates will create suitable conditions to the mortgage holders to afford repayments through lump sum payments and the
ability to pay more frequently.
The aforementioned report also states that with very small changes in housing market activity, the growth rate is expected to remain close to 4.5% during 2016, as can be seen in chart 1.2.
By the end of 2015, total outstanding residential mortgage credit would be in the range of $1.34 trillion and by the end of 2016 the figure may be very close to $1.4 trillion.
The most current profile of home buying in Canada can be found in Appendix A, as well as demographic profile in Appendix B.
5
SWOT Analysis
For the purpose of the SWOT analysis, we will be focusing on Residential Mortgages offered by TD Bank for first-time buyers.
Strengths Opportunities
• Exclusive online tools to aid purchase customers
decisions
• Staff knowledge
• Special offer for newcomers
• Wide range of mortgages’ options
• Testing and research regarding prices and rates across the
country
• Provide easy-to-understand pricing and terms
• Offer fully transparency on mortgages fees and improve rates
• Focus on Generations X and Y
Weaknesses Threats
• Major competitors make it difficult to increase market
share
• Lack of differentiation
• Mortgages are perceived as a complicated process.
• Increasing participation of new players such as Mortgage
Finance Companies and Mortgage Investment Corporations
• The prices of houses are increasing what cause increasing of
down payments
• Regulatory changes imposed by the government
SWOT Analysis Summary
6
Total revenue = $29,961 millions Revenue from mortgages =
7,284 millions
The SWOT analysis revealed as main weaknesses lack of differentiation and the current perception of mortgages as a complex process. Both should be tackled with additional efforts in training, customer service and communication initiatives.
The SWOT analysis also shows that TD’s largest areas for growth are the creation of a strong brand positioning to introduce a new loan that will enforce the main attributes that the generations X and Y are looking for through some of our current strengths, such as the high experienced staff and our exclusive online channels.
Furthermore, the increasing participation of new players is something to follow closely in order to anticipate the movements of potential and current competitors.
Goals and Objectives 7
Total Revenue = 34 000 millions
Revenue from Mortgages = 7900
millionsRevenue from Express
Mortgages = 624 millions
Graph 1: Revenue for 20143
Graph 2: Business and Marketing objectives
Graph 3: Forecast for 2016Goals and Objectives
3 Source: Annual report 2014, TD Bank: https://www.td.com/document/PDF/ar2014/ar2014-Complete-Report.pdf
Marketing objective: increase market share
by 1.95% through Express Mortgage
Business objective: increase annual profit
from mortgages by 3%
Marketing tactics: execute a multi-channel marketing communications strategy
combined with training and research initiatives, starting
with 3-months testing in Manitoba.
Marketing strategy: Introduce a new product and attract 20 000 first-
time home buyers into the residential mortgage
category by offering a unique service
8
Marketing objectives and goals Business Objectives and Goals
• Build awareness about TD new product – Express
Mortgage within our target segments.
• Become the home lender of choice when it comes to
first-time buyers.
• Grow Market Share of total dollar amount of
mortgages from 15.05% to 17% within the
residential mortgage category by introducing our
Express Mortgage.
• Develop cross-selling opportunities in order to
maximize our profit.
• Our annual revenue target will be CAD 450
millions from Express Mortgage.
• Reach our target group of approximately 1
million people and get around 30 000 new
borrowers through Express Mortgage.
Competitive Assessment
9
Rank Banks Mortgage Book, 2014 Market share
1 RBC $198.2 billion 16.96%
2 Scotiabank* $187.4 billion 16.04%
3 TD Bank $175.9 billion 15.05%
4 CIBC $146.6 billion 12.55%
5 BMO $82.6 billion 7.07%
6 National Bank $34.7 billion 2.97%
Other brokers $171.6 billion 14.63%
Total $1168.6 billion 100%
BMO
CIBC
Scotiabank
RBC
TD Bank
715 720 725 730 735 740 745 750
727
732
737
738
746
Big 5 bANKS
Graph 4: Overall satisfaction Index Score Ranking Table 1.2: Assets Market share, 20144 (Based on a 1,000-point scale)5
National Bank
Tangerine
700 720 740 760 780 800 820
747
811
Midsize Banks
Graph 5: Overall satisfaction Index Score Ranking (Based on a 1,000-point scale)6
Competitive Assessment Summary
4 Source: http://canadianmortgagetrends.com 5 Source: http://canada.jdpower.com/press-releases/2015-canadian-retail-banking-satisfaction-study6 Source: http://canada.jdpower.com/press-releases/2015-canadian-retail-banking-satisfaction-study
10
We are going to focus our competitive analysis on residential mortgages offered by major local banks in Canada, given that the Canadian residential mortgage market is dominated by the “Big Six”: Bank of Montreal, Scotiabank, National Bank, Canadian Imperial Bank of Commerce, Royal Bank Financial Group, and TD Bank Financial Group.
All of the main competitors offer 5 years closed fixed mortgages, the same requirement of down payment to avoid insurance fees, and similar application processes: pre-approval online and to reserve personal meetings in the branch. Therefore, the major point of differentiation will be to maintain competitive interest rate together with highly customized mortgage process to meet customers’ life-cycle needs.
The table 1.2 illustrates that in the residential mortgage industry the competition is pretty aggressive. TD Bank is in the third position after leaders of the market - RBC and Scotiabank, which consolidated its position with the acquisition of ING Direct (the eight larger bank in Canada).
Additionally, it is also important to take into account the customer’s perception of our company, and according to the J.D. Power 2015 Canadian Retail Banking Satisfaction Study we have been in the first position for the tenth consecutive year. And it’s given to our efforts in improving our self-service and making our online platforms more user-friendly, as well as improvements in personal service, facilities, communication and problem resolution. On the other hand, the overall satisfaction average of our competitors went down 12 points from 2014.
Competitive Snapshot
11
Banks SOM in Assets, 2014 Differentiation in terms of mortgage category
TD Bank 23.9% The highest rate of customer satisfaction; exclusive offers for mortgage borrowers; extending opening hours and facilities factor.
RBC 23.8% The leader of the market within the mortgage category; the biggest bank in Canada; high level of trust
Scotiabank* 20.4% Canada’s most international bank, well known in different countries; one of the highest rate of customer satisfaction; one of the lowest interest rates for mortgages.
BMO 14.9% Flexible terms; high level of management leads to high level of customer service
CIBC 10.5% “Deep relationships with client” is one of the strategic priorities that give the bank an opportunity to be one of the high-trust banks; high investment in online-banking tools.
National Bank 5.2% The highest level of trust in Quebec with solid market position and strong growth outside the province.
Tangerine (own by Scotiabank)
Scotiabank SOM includes Tangerine SOM Online; Immediate; Customer Service 24/7
Table 1.3: POD of the Big 6 Banks7
Category: Residential Mortgages TD Bank Express mortgage Scotiabank BMO CIBC RBC
Interest Rate (fixed 5 years) 2.39% 2.44% 4.74% 2.74% 2.94%
Table 1.4: Interest rates8
Term Length
Age Group
18-34 35-54 55+ All Ages1 YR 5% 7% 6% 6%
2-4 YR 27% 18% 12% 20%5 YR 66% 65% 69% 66%
6-10 YR 3% 9% 10% 7%>10 YR 0% 0% 2% 1%
Table 1.5: Mortgage popularity by the length of term and age group9 Chart 1.3: Historical 5-year Fixed Mortgage Rates from 1973 - 201510
7 Source: http://canadianmortgagetrends.com
8 Source: http://Ratehub.ca/best-mortgage-rates
9 Source: http://Ratehub.ca
10 Source: http://Ratehub.ca/best-mortgage-rates
12
Competitive Snapshot Summary
As it can be seen from the table 1.3, TD Bank is the assets leader within the market. Through the analysis of the competitors, it is possible to identify that each bank has a particular positioning strategy to build trust and achieve different groups of customers, as well as particular PODs as pointed out previously.
Chart 1.3 illustrates the fluctuation of interest rates on the market from 1975 to 2015. That shows a decreasing trend starting from 1982.
On of the advantages of TD Express Mortgage will be the offer of a fixed interest rate of 2,39% that will be the lowest on the market for 5 years fixed.
The table 1.4 states the current interest rates offered by the 5 big Canadian Banks. Moreover, we have decided to focus our strategy within the category of 5 year fixed mortgage due to its popularity. A 5-year mortgage term, at 66% of all mortgages is by far the most common duration.
Fixed rates are also most common, representing 66% of total mortgages as well. In terms of age dispersion, fixed rate mortgages are slightly more common for the youngest age groups as can be seen in table 1.5.
13
Values:Simplicity and Efficiency of the process
Lowest fixed rate on the market Reputation of TD and Security
Comfortable and Stressless process
What Lucie needs from us?Advices and help with understanding
Transparent fees and termsLess time consuming and efficient process
Feel comfortable and satisfied with our service Pay less for better options
Lucie fears:Hidden terms and feesMaking bad decisions
Lack of experience and understanding Buying the house she cannot afford
Motivation:Lucie has a good job and just started a family. She doesn't know a lot
about mortgages, but she believes that she can handle it. She is looking for a new home to start a new chapter of her life.
Brand Persona for TD Express Mortgage Lucie
27-40 years old professional with higher than average annual income. Lucie has
recently started a family, doesn’t have a lot of free time and is looking for quick
solutions for her problems
Target Market and Segmentation
Target Segment GenerationType of
residential mortgage
Average education
Annual average Income
Substantial amount of savings
Approximate population
Segment #1- Newcomers
Generations Y and X
(female and male)
First-time buyers
University Degree or College
Certificate
CAD 70,000 or above
CAD 200,000 or above
Around 1 million peopleSegment #2 -
Young FamiliesTable 1.6: Target segments for TD Express Mortgage
Graph 6: Brand Persona for TD Express Mortgage values
Target Market and Segmentation
14
After the analysis of the profile of home buyers in Canada, it was decided to introduce a new product with a campaign focusing on Manitoba, mainly Winnipeg, as a test market for 3 months and targeting current and potential clients that meet the financial requirements to buy their first property, but are not aware of the financing opportunities they already can afford. The description of our main segments can be find in table 1.6. Typical brand persona was also included in graph 6.
We are forecasting that in Manitoba will be around 50 000 people in a target group. The analysis of the results in Manitoba will allowed TD to successfully launch Express Mortgage all over the Canada, targeting around 1 million people and expecting to get more than 30 000 new customers.
15
Product Strategy & Tactics
Features Benefits PODs
5 years Fixed Rate
The mortgage rate and payment remain the same throughout the term, making budgeting easier.Provides peace of mind over a long period of time knowing that if rates go up, your payments stay the same.
We will offer one of the most competitive interest rates within the 5 years fixed rates category.
Pre-approval
Secure mortgage financing prior to the home purchase. The prospect will know how much he/she can spend.
Non-traditional or “no income” verification is allowed.Canadian credit history is not requiredOnline Pre-approval combined with specialized representatives connected 24/7 to provide real-time assistance.
Up to 120 day rate guaranteeFix the mortgage rate up to 120 days before closing.If rates go down you get the lower rates, if they rise, your rate is fixed.
Express Mortgage will offer the larger day rate guarantee of the Market.
Portable mortgageHaving a great rate and moving it to a new home. We are providing the flexibility and
convenience of moving to a new property with the current conditions.
Financial Advice Assuring the knowledge of the best offers and opportunities for mortgage holders.
Exclusive offers for mortgage holders.
Table 1.7: Product Strategy and tactics
Product Strategy & Tactics
16
We are going to introduce to the market the new loan product Express mortgage, therefore the strategy adopted will be product development.
We want to position our product as the most simple, efficient and convenient loan for first-time buyers and newcomers. Based on previous secondary research, the main concerns of first-time buyers are to understand the complex logic behind mechanisms of mortgages and the lack of transparency of the process.
The product strategy will not focus on interest rates as a key selling point. Instead, the position will point out the customer centric and highly customized first-time buyer mortgage of TD to meet life cycle needs. Express mortgage will have simple criteria of approval, simple timetable, and a clear pricing structure. Moreover, we will make it easier to deliver the mortgage to our customers. The aforementioned statements will be assured through the implementation that will be discussed ahead.
Pricing strategy
17
Table:1.8 Snapchat of Terms & Conditions
Chart 1.4: Clustering, based on customer satisfaction and rates11
Pricing strategy
11 Source: http://canadianmortgagetrends.com and http://Ratehub.ca/best-mortgage-rates
18
Snapchat of Terms & Conditions
Rate Closed fixed Rate 2.39 %
Down paymentMin 15% down payment covering
the insurance costs
Term 5 years
Payment options Monthly payment
TD Bank will use for Express Mortgage a pricing strategy - Value-Based method. We will be setting our price focusing on the overall value of our product from customer perception. As Express Mortgage is a new product within this category, it will be launched with the best interest rate of the market, following a penetration pricing strategy.
Table 1.1 shows a general overview of our pricing strategy with basic terms. Moreover, as can be seen from the clustering chart presented above, TD bank meets the ideal conditions in terms of rates and customer satisfaction to successfully launch Express Mortgage into the market.
The rationale behind our recommendation for Express Mortgage price is based on our goal to increase market share in the residential mortgage category by offering the most competitive interest rate among our competitors as well as an unique solution for first-time buyers within the generation X and Y and newcomers.
Distribution Strategy
19
TD RBC CIBC Scotiabank BMO0
500
1,000
1,500
2,000
2,500
3,000
Branches
5% 5%
10%
16%
64%
ATM Call Only Web OnlyBranch Only Multichanel Customers
Chart 1.5: Number of branches12 Chart 1.6: Channels using by Banks’ Customers13
Distribution Strategy12
http://www.cba.ca/en/banks-in-canada13 http://thefinancialbrand.com/42543/multichannel-marketing-customer-experience-banking/
20
To market our new Express Mortgage solution, we will be using two main channels. First of all, it will be directly distributed to our customers through special departments operating in each branch, providing detailed and thorough support to our clients.
As can be seen in the Chart 1.6, the most popular channel is Branch. According to the chart 1.5 it could be easily noticed that the biggest amount of branches belongs to TD. It will be one of our strongest points during our campaign and will enable TD team to provide our customers with a distinguished support.
Secondly, we will develop an exclusive microsite to provide all the required information needed for making buying decision. This channel will enable our customers to contact our specialists online 24/7, providing them the opportunity to move forward into the process of getting a mortgage.
To win tomorrow’s digital customer, which is often related with young generations, we need to better understand the needs of our customers and quickly adapt our channels, based on the new technologies available. TD is currently known as one of the most innovative banks in Canada and we will be taking advantage of this strong aspect to deliver the most efficient multi-channel mortgage process to our customers.
Promotion Strategy
21
Online Advertising
Mobile Advertising/ Marketing
Social Media
E-mail Marketing
Word-of-mouth campaign
PR, Community Events
Direct Mail
TV/Radio Advertising
78%
71%
64%
61%
44%
41%
27%
23%
15%
15%
24%
26%
35%
51%
46%
42%
2%
2%
3%
6%
4%
5%
15%
15%
6%
13%
10%
8%
18%
3%
12%
19%
More Important About the SameLess Important Not Important/Not Sure
Bank websites
Information from branch
Bank employees
Friends and/or relatives
Social media
Financial advisor
Third-party websites
TV/radio Ads
Information sent in the mail
38%
29%
22%
29%
13%
16%
14%
12%
9%
Sources used when searching for a Financial Services provider
Chart 1.7: Evaluation of promotional channels from banks’ perspective14.
Promotion Strategy
14 http://thefinancialbrand.com/42543/multichannel-marketing-customer-experience-banking/
Chart 1.8: Most important information sources when searching for a financial service provider from customers’ perspective
22
The main promotion objective is the launch of Express Mortgage through the implementation of an integrated marketing campaign where we will present it as the most simple, efficient and convenient loan for first-time buyers and newcomers.
We will use Manitoba as a place to test the product and communication during 3 months. After this period we will be working on the main finds for a national launch. In addition, we will have several initiatives of research and training to understand needs and expectations from our target, as well as to provide a superb customer service.
To reach the main objective of our communication, the idea was the creation of the creative concept “just in time”. Moreover, the tactic is to use the principal tools of communication adopted by generations X and Y in order to reach current and potential clients together with the most effective channels to promote Financial Services. The media mix also takes into consideration the secondary research presented above with the most relevant promotional channels from the industry players and the customer perspectives.
Creative Concept
Based on this premise, we have developed the creative concept “Just in time”. The name of the product transmits the main attributes of the product: simple, quick and convenient. The key selling points “customer centric” and “highly customized first-time buyer mortgage of TD to meet life cycle needs” will be expressed through the slogan “Just in time”.
Our concept has the intention to communicate the idea that TD will provide the ideal solution that customers will need through the journey of buying their first property.
Budget Summary
23
RankStrategy Tactic
# ContactsResponse
RateConversion
RateAverage income
Total Sales $ Total Cost CPM Est. ROITotal
ResponsesTotal
Conversions
1 Advertising 360000 25.00% 15.50% 30000 $418,500,000 $2,880,000 $8,000 $144.31 90000 13950
2Direct
Marketing120000 35.50% 10.9% 30000 $139,302,000 $360,000 $3,000 $385.95 42600 4643.4
3 PR 20000 22.00% 5.0% 30000 $6,600,000 $40,000 $2,000 $164.00 4400 220
4 Online 500000 8.00% 5.0% 30000 $60,000,000 $100,000 $200 $599.00 40000 2000
Total 1,000,000 $624,402,000 $3,380,000 $1,293.26 177000 20813.4
Table 1.9: Estimated Return on Marketing Investment or Marketing ROI
85%
11%
1%
3%
Advertising Direct Marketing PR Online
Chart 1.9: Percentage of Marketing SpendingIMC Strategy
24
The relationship between those tools is: to use advertising to increase the brand awareness, reaching the impact required for the launch of Express Mortgage as well as to promote the main events and promotional activities that we will promote during the campaign. On the other hand, the promotional activities will be used to reach a closer approach with our main targets. Furthermore, we will use direct marketing and PR to gain more credibility and exposure.
Promotion Mix Medium Rationale Investment
Advertising
TVTV will be used to launch the campaign massively on strategic channels over the winter (from January to March). The main objective is to get a huge impact in the first step of the campaign.
$1 780 000
Radio
We will use Radio as a support media since it is inexpensive, clutter free and targetable. We will develop spots to promote the main message of the campaign, as well as to reinforce the brand image within the Mortgages segment and to promote the promotional events we will be doing over the year in strategic stations.
$400 000
Out-of-homeThe rationale behind the use of this media is to reach our main target on-the-go. We will concentrate our outdoor initiative between May and October in strategic points of the cities.
$500 000
Direct-marketing
Direct MailWe will develop promotional letters to reach the target segments of the campaign promoting our new residential mortgage as well as inviting them to visit our branch to get additional information. Our mailing will include our current base of clients and other bases of potential first-home buyers.
$360 000
Email MarketingWe will develop promotional letters to reach the target segments of the campaign promoting our new residential mortgage as well as inviting them to visit our branch to get additional information. Our mailing will include our current base of clients and other bases of potential first-home buyers.
$100 000
PREvents
To attract public attention and to spread the news of our new product we will conduct 2 public events devoted to Express Mortgage and take the opportunity to speak publicly about our new mortgage solution, which will enable us to reach the media and audience directly and answer their questions.
$30 000
Press releases We will create a press release campaign that will generate news coverage of our new mortgage. $10 000
InternetSM Profiles +
Online Ads
We will create an online banner campaign that will be included in the social networks with the highest viewership, such as Facebook and YouTube. We will use our website as well as our Facebook and Twitter accounts to advertise Express Mortgage, making it our background on Facebook and Twitter in addition to creating brand content to increase the engagement of the entire campaign.
$200 000
Key Milestones
25
The mortgage process has been always perceived as a complex process from clients’ perspective. We are facing the challenge of changing this perception through the introduction of our new product – Express Mortgage. Moreover, it will be presented as the most simple, efficient and convenient option within the residential mortgage category for first-time buyers.
The reasons behind the aforementioned statements:• One of the most competitive interest rates within the 5 years fixed-rates category among top 6 banks• High-class service of financial advising in branch and 24/7 online • Simple criteria of approval• Simple timetable• Transparent pricing structure
We are expecting to achieve the following results till the end of the 2016:
• 20 000 customers within Express Mortgage offer• Grow Market share from 15.05% to 17%• Build awareness about our new product• Become the home lender of choice when it comes to first time home buyers• Annual revenue target of $450 000
We will use the following metrics to measure the results of our campaign:
Goals MetricsBrand awareness Micro-site traffic + Page views + Support chatter +Referral linksLead generation # of completed forms + Response Rate + Conversion RateSales Online sales + Offline salesCross-sell Sales for exclusive offers combined with Express MortgageTable 2.0: Metrics for measuring the results of our campaign
Profile of home buying in Canada (Appendix A)
26
According to the last report released by the Canadian Association of Accredited Mortgage Professionals (CAAMP) from January 2013 to May 2015, the most relevant statistics of the profile of home buying in Canada are as follow: • Since 2013, approximately 45% (280,000) of home buyers are first-time buyers
• Of all home buyers, 13% (about 80,000) have no financing on their property and 67% (about 420,000) have a mortgage but no other financing
• 18% of first-time buyers relied on gifts and loans from family for their down payment; 10% used funds from their RRSP and 5% from their TFSA
• 64% of purchasers borrowed less than 90% of their approved amount
• 52% of mortgages were obtained from banks, 34% from mortgage brokers, and 10% from credit unions
• Bank use is lowest for first-time buyers (47%) and highest for buyers who have purchased more than two homes (58%)
Profile of home buying in Canada (Appendix A, cont.)
27
• Use of mortgage brokers is most frequent for first-time buyers (39%) and lower for repeat buyers
• On average, the amortization period is 22.1 years. 22.7 years for first-time buyers
• 70% of borrowers expect to repay their mortgage early, 16% expect to use the full amortization period and 14% expect to take longer than the contracted period.
• Fixed rate mortgages are most common (72%), while 21% are variable or adjustable rate mortgages and 7% combine fixed and variable rates; most have five-year terms (67%)
• The mortgage market remains extremely competitive in Canada. For home buyers who purchased their homes from 2013 to the present, the average mortgage interest rate is 3.00%.
Segmentation (Appendix B)
28
The Canadian Residential Mortgage industry presents the following demographic profile:
Creative Mock up for Email Marketing (Appendix C)
29
Promotional Plan Blocking Chart
Testing in Manitoba
National Campaign
* See the Training Program in the Appendix E.
Training Program (Appendix E)
31
Pre launch JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Total CostPlanning Who When
Plan & Set objectives Oct
Training* Dec – (Manitoba)
Research
Marketing
Micro site Digital agency Dec $80 000
PR event Agency $30 000
Direct-Marketing Mkt team $460 000
PR Agency $10 000
Media Plan
TV Agency $1 780 000
Radio Agency $400 000
Internet Ads Agency Dec $60 000
Outdoor Media Agency $500 000
Facebook fan page Digital agency Dec $40 000
Twitter Digital agency Dec $20 000
TRAININGSchedule: Develop online training sessions
1) Training program with 7 sessions over 1 month for Testing Market – Manitoba2) Training program with 7 sessions over 2 months for National launchTheme: Introducing Express Mortgage Session 1: Overview of Express Mortgage, terms and conditions with Quiz in the end of the sessionSession 2: Overview of the target groups, understanding the needs of main segments with Quiz in the end of the sessionSession 4: Pre-Approval and Registration Set Up with Quiz in the end of the sessionSession 5: Loan Documentation management with Quiz in the end of the sessionSession 6: Micro site support with Quiz in the end of the session Session 5: Risk management with Quiz in the end of the sessionSession 6: Sales support with Quiz in the end of the sessionSession 7: Cross selling opportunities with Final test in the end of the session
OUTCOMESWe are planning to build strong relationships between our clients and employees, based on professionalism, knowledge and understanding. Our employees should be able to provide a superb assistance as well as to compare and emphasizes the points of difference of Express Mortgage in comparison with our current mortgages and from competitors.All of our employees should have deep understanding of the new product and they must participate in the whole training program and show excellent results on quizzes and final test before the launch. After de competition of our training sessions, we must assure that our team is prepared to implement all stages of the selling process.
Sources
32
BMO official website: https://newsroom.bmo.com/press-releases/bmo-annual-debt-report-household-debt-up-6-per-ce-tsx-bmo-201408050960770001
Canadian Association of Accredited Mortgage Professionals official website
Annual report 2014, TD Bank: https://www.td.com/document/PDF/ar2014/ar2014-Complete-Report.pdf
Canadian Mortgage Trends website: http://canadianmortgagetrends.com
JD Power website: http://canada.jdpower.com/press-releases/2015-canadian-retail-banking-satisfaction-study
JD Power website: http://canada.jdpower.com/press-releases/2015-canadian-retail-banking-satisfaction-study
Ratehub website: http://Ratehub.ca/best-mortgage-rates
CBA website: www.cba.ca/en/banks-in-canada
The Financial Brand website: http://thefinancialbrand.com/42543/multichannel-marketing-customer-experience-banking/
PWC online publications: http://www.pwc.com/ca/en/industries/banking-capital-markets/publications/canadian-banks.html
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