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.

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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

Timing: Blocking Chart (Appendix D)

30

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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