This document discusses strategies for conducting financial, pricing, and risk analysis for new product development in financial institutions. It emphasizes the importance of historical financial data analysis, financial forecasting, understanding product profitability, identifying profitable and unprofitable customers, and using financial analysis to understand competitors. The document also discusses components of sales analysis and some common pitfalls in financial analysis.

1. PRODUCT INNOVATION & MANAGEMENT
FOR FINANCIAL INSTITUTIONS
Presented by: Kevin Chetty
Commercial Director

2. GAME 1

3. THE LONGEST JOURNEY IS TAKING THE FIRST
STEP

4. I WANT
SBAF Private Card delivers the
benefits & enhancements desired
12/10/29 the Private Bank Client
by

5. INTRODUCTION

6.  Topic
 Presenter
 Delegates
 Workshop Ground Rules
 Workshop Expectations & Objectives
6

7. AGENDA

8.  Day 1
 Session 1: Stimulating the Innovative Creative Juices
 Session 2: Competitor Analysis in a Competitive Environment
 Session 3: Financial Analysis, Pricing Strategy & Risk Analysis
 Session 4: Customer Segmentation
 Session 5: Market Research

9. Developing a compelling product proposition forms the heart of
any business strategy
“Strategy is based on a differentiated customer value
proposition, and satisfying your customers is the source of
sustainable VALUE creation”
Robert Norton & David Kaplan
9

10. WHAT IS INNOVATION?
• The process by which an idea or invention is translated into a good or service for
which people pay or something that results from this process
• To be called an Innovation an idea must be replicable at an economical cost and must
satisfy a specific need
• 2 types of innovation:
• Evolutionary Innovations: Brought about by gradual changes in technology or
processes and have 2 types:
• Continuous Evolutionary Innovations – result in alternations in a product or
process characteristic instead of NEW product, e.g. Laptop computers, fluoride
toothpaste
• Dynamic Continuous Evolutionary Innovation – requires some user-learning, but
does not disrupt his/her routine
• Revolutionary Innovations: Require a good deal of user-learning, often
disrupt routine, create new behaviours, e.g. Photocopier, personal computers, internet.
Greater RISK taking, NEW Product, hence10 NEW markets

11. 4 LEVELS OF INNOVATION
11

12. FATHER OF INNOVATION....?
• “We used to dream about the stuff, know we get to
build it, its pretty neat….”
• “We are gambling on our vision, and we would rather
do that than make ‘me to’ products……”
• “Its more fun to be a ‘pirate’ than to join the navy……”
• “And 1 more thing........”
• “I think if you do something and its turning out pretty good, then you should
go do something else wonderful, not dwell on it to long, just figure out what’s
next..” 12

13. GAME 2

14. WHAT IS PRODUCT MANAGEMENT?
It is a Systemic, holistic business management of
products & Services
MARKETING MARKETING
FINANCE SALES
IT/OPERATIONS
14

15. TRADITIONAL PRODUCT LIFE CYCLE
12/10/29

16. SESSION 1: Stimulating the Innovative Creative
Juices

17. 1. Background
YOUR CREATIVE FORCE: AN UNTAPPED POTENTIAL
• I define Creative Force as the power to create that flows through all of us!!!!!
• Some people, creativity is a rare skill, but in my experience we all can and have a creative
being waiting to explode in each one of us….TAP INTO THIS AS A
TEAM/GROUP
• Creativity is NOT about games or play, it must be approached with respect – because it
is a powerful thing – perhaps the most powerful thing
• When you use your natural creative power to innovate in your own life or to bring
innovations to the lives of others, you’re quite capable of changing our world
17

18. 1. Background
LEADING WITH CREATIVE VISION
• Defining an innovative goal to motivate your team
• Exploring your leadership orientation and style
• Building leadership experience
• Setting the right tone for creativity
• Creating an ‘Innovative Hub’ group
• Setting ambitious goals
• Leadership through Ethics & Innovation
• Recognizing NEW ideas
• Getting ongoing feedback from customers
• Acknowledge mistakes/catastrophes
18

19. 1. Background
THE CREATIVE THINKING PROCESS
19

20. 1. Background
THE CREATIVE THINKING PROCESS
20

21. 1. Background
CREATIVE MARKETING PENTAGON
HAPPY SURPRISES
PR
E I CI
O PL NG
PE
EXPECTED
T
PR O
EN
CORE
EM
M OTI
AC PL
ON
PRODUCT
21

22. 1. Background
NARROWING YOUR FOCUS TO FIND SOURCES OF CREATIVE
ADVANTAGE
PRODUCT • Innovate to offer a better product, design, technology, packaging or other related
innovations
• If you cannot afford to invest the next hot product, be on the look out for it, and
become a reseller
PRICING • Find ways to drive costs down and offer lower prices, or explore creative ideas to
take some of the sting out of buying, such as by offering loyalty programs, layaway,
innovative warranties etc
PLACEMENT • Distribute your products in helpful new ways (via the Internet, Mobile Sales, Cell
Phones, Social Media, etc
• Distribution is the key easiest way to score a home run
PROMOTION • Find clever, attention grabbing ways to communicate with buyers and build brand
equity
PEOPLE • Engage free help through social media by getting people to talk about your brand,
product, service, etc
22

23. 1. Background
BEING AN INNOVATIVE STRATEGIST
• Expanding into new geographic regions
• Pursuing new types of customers
• Improving or adding to your product line
• Introducing a new technology or invention
• Partnering with one or more other organizations to something you cannot do yourself
• Dramatically reducing your costs or turnaround time by innovating how you source or
produce your products or services
• Distributing in new ways to save money, time, increase market coverage or provide
greater ease and availability of purchase
• Updating or replacing your brand name with something more dynamic
• Influencing strategy from bottom-up
23

24. 1. Background
STRATEGIC INNOVATION CYCLE THAT DRIVES ORGANISATIONAL
SUCCESS
Efficient Production Growing
Firm maximises
production
Profits Peak as
Innovation Boost Market Saturates
Profits
Strategic Phase Profit Momentum
Firm needs to shift to
Firm shifts phase as it
back innovation will it
scales up to profit
phase shift in time???
from invention
Winning Innovation
Identified
Slowing
Creative Searching
24

25. 1. Background
TRACKING THE LIFE CYCLE OF A PRODUCT CATEGORY
Creative Searching
Until Market Saturates
Again
Sales & Competition
gets Cutthroat Either Improvement
revives Sales
Market Begins
Saturate
Sales Gain ????
Momentum Or Some New
Invention replaces
product
Innovative Product is
Introduced
Introduction Growth Maturity Decline - Revival Death
25

26. 1. Background
AN INNOVATORS PORTFOLIO OF PRODUCTS
High
Maximise Update
Profitability
Develop Eliminate
Low
High Low
26

27. 1. Background
MIND MAPPING (CRAFTING THE IDEA)
IDEA
27

28. SESSION 2: Competitor Analysis in a Competitive
Environment

29. 1. Background
NEW PRODUCT DEVELOPMENT IN A COMPETITIVE ENVORONMENT
• Managing NPD in a dynamic environment is a complex task
• Using a competitor to make more informed decisions around NPD/Innovation
• NEW product launch and later more ADVANCED
• In a highly competitive market banks can adopt different technologies/products & use TIMING to
mitigate the risk of price competition
• Banks can invest in advanced technologies/products to influence a rivals choice – 1st to market
• Must explore product flexibility, if NEW product fails, then resort to OLDER one
• Introducing a NEW product in a any competitive industry is difficult
• In competitive industries (financial services), product introduction timing is a function of external
factors like market conditions and industry clock-speed
• Timing is KEY or banks lose market share
• SHOP the competition, COMPETITOR MATRIX
29

30. 1. Background
NEW PRODUCT DEVELOPMENT IN A COMPETITIVE ENVORONMENT
• It is important to understand the competitive market insights through ongoing research
• Without market intelligence, it is challenging for banks to react appropriately and
competitively
• Leadership must understand that:
• Market segments in which they operate
• Every customer type (buyer, user, influencer, or decision maker)
• Changing preferences of various customer types
• Industry environment in which banks operate
• Each and every competitor in the industry and how each product is positioned
against each competitors product
• Undertake some sort of PESTEL analysis, as this will provide impetus for strategic decision
and spend on growth/products
• Undertake a SWOT analysis of your products vs. the competitors
30

31. 1. Background
PRODUCT SELECTION & MARKET COMPETITION
DEVELOPMENT DECISION
BANK 1 BANK 2
QUALITY
QUALITY
TIMING TIMING
PRICING / PRODUCT PRICING / PRODUCT
DEVELOPMENT DEVELOPMENT
MARKET DECISION
COMPETITIVE
MARKET
31

32. 1. Background
THE COMPETITION
COMPETITIOR
ANALYSIS
CRITICAL THINKING
CRITICAL THINKING
COMPETITIVE
COMPETITIVE
PRODUCT
STRATEGY
EVALUATION
STRATEGIC
STRATEGIC
MINDSET
MINDSET
COMPETITIOR
POSITIONING
32

33. 1. Background
COMPETITOR ANALYSIS TEMPLATE
IMPORTANCE
FACTOR MY BUSINESS STRENGTH WEAKNESS COMPETITOR A COMPETITOR B COMPETITOR C
TO CUSTOMER
Products
Price
Quality
Selection
Service
Reliability
Stability
Expertise
Company
Reputation
Location
Appearance
Sales Method
Credit Policies
Advertising
Image
33

34. 1. Background
COMPETITIVE PRODUCT EVALUATION
• Competitive evaluations will help determine:
• Products & costs in the market
• Quality of products available
• How to measure those products
MOST COMPARABLE………BEST OF BRANDS………AVAILABILITY OF
PRODUCTS……..PRODUCT SERVICES AVAILABLE……..COSTS OF
PRODUCT/S
34

35. 1. Background
COMPETITIVE POSITIONING
35

36. 1. Background
COMPETITOR STRATEGY
COST LEADER • Firms goal is lowest price
• Source of cost advantage must
be fully exploited
• Above average performer on
products
DIFFERENTIATED • In differentiated strategy firms
LEADER seek to be unique
• It selects 1 or more attributes
that buyers want and uniquely
positions itself to meet this
• Uniqueness attracts premium
price
FOCUS LEADER • Focus on narrow &
competitive industry
• Firm selects a segment or
group of segments in industry
and
tailor makes solution
36

37. VIDEO: FUTURE OF
BANKING

38. 1. Background
RETAIL BANKING A REALITY
The traditional retail bank is at an inflection point. The needs and
expectations of customers are changing as quickly as the
competition. Customers are demanding seamless, multi-
channels, with better products and services. Simultaneously,
other financial institutions and non-traditional players are
looking for opportunities to invade this space or to redefine it
through disruptive innovation.
The result is forcing banks to examine a more balanced,
integrated approach to product management and innovation,
to ensure sustained growth
38

39. 1. Background
AN EVOLUTION or REVOLUTION TO FIND YOUR SPACE
39

40. 1. Background
THE CHANGING FACE OF BANKING
In view of several developments in the 1990’s, the banking industry is changing
…
Global banking more competitive
The IT revolution
Information explosion
Rationalisation of branches in 1990’s
Banks are trying to become one-stop financial supermarkets
How did banks respond?
o Distribute more PRODUCTS & SERVICES through other ways
and channels …
o … proliferation of non-traditional banking channels

41. 1. Background
A COMPETITIVE LANDSCAPE e.g SOUTH AFRICA
Market landscape
Banking environment Key macro econ trends
Competitors becoming
Macro economic
increasingly aggressive
environment outlook is
Alliances and joint ventures
moderate
Customers
Use a wide range of Regulation
financial products Tier 2/3 legislation
Proliferation of National Credit Act
distribution Competition
alternatives Commission
Lower commission
earnings

42. VIDEO: BANKING 2.0

43. 1. Background
RAISING THE GAME IN RETAIL BANKING
Booz Allen’s research shows there are clear opportunities to enhance revenue
in retail banking. Going forward retail banks need to be INNOVATIVE, thro:
o Provide dedicated channels (website, call centre, mobile sales forces and
specialist areas in branches) for affluent customers.
o Reduce waiting times in branches through the use of welcome desks
(concierge concept) and the option of making appointments in advance.
o Efficient call centre menus and staffing that enable customers to quickly
reach people who can resolve their queries.
o Enable customers to tailor websites, supported by strong security
measures (e.g. random number generators).
o Offer mobile sales advisers who can complete transactions at the meeting,
for selected customer groups
o Products that are understandable and easier to transact
Source: Reference Booz/Allen/Hamilton - Striving for Growth, Best Practices in
Retail Banking Sales and Service Channels
43

44. 1. Background
THE 6 DYNAMICS CUSTOMER FOCUS
In the EVOLUTION of retail banking channels, the 6 dynamics are critical to developing
effective CUSTOMER FOCUSED strategies:
• Branch generated revenue growth is becoming more challenging
• Transaction processing and customer services are becoming increasingly
independent of the branch channel
• Customer demographics are shifting
• New technologies are gaining widespread adoption, allowing customer relationship
management to become channel independent
• Changes in the regulatory environment are altering the playing fields
• Banks must prepared for overlapping competition (Non-Banking Entities)
•Innovative Products & Services from competitors

45. 1. Background
WHAT DO CUSTOMERS WANT? NOT WHAT BANKS……
45

46. SESSION 3: Financial, Pricing & Risk Analysis for
New Products

47. 1. Background
FINANCIAL ANALYSIS
 Product performance and financial analysis, thereof is critical to make an informed decision/s
 Historical data is key together with REAL market facts
 Analysis of future scenarios is also KEY – FINANCIAL FORECASTS – short & long-term
 About estimating sales volumes
 About estimating direct and indirect costs
 Ultimately the profitability
 Ultimately the market share position of the product line/s
 Must have product level overview of financial performance
 Product Mangers must have complete accountability for the P/L of product/s
 Product Managers must understand the financial implications to make informed decisions
 Identify the most profitable and unprofitable customers
 Understand the ‘Drivers’ of revenue performance
 Use financial analysis to understand competitors
47

48. 1. Background
FINANCIAL ANALYSIS: PRODUCT SALES ANALYSIS
 Defined as, “ gathering, classifying, comparing and study of company sales data”
 Sales analysis is a powerful tool
 Major components of Sales Analysis:
 How are sales defined
 In what units can sales be analysed
 In what category can sales data be placed
 What are the appropriate standards in which sales can be compared?
 Some of the Pitfalls:
 IT systems are NOT designed by Product Managers
 Financial Managers have different mindsets
 Lack of understanding of all cost related to a product/s
 Lack of understanding of proper financial forecasting
 Predictive analysis
 Lack of proper internal marketing by PM
48

49. 1. Background
FINANCIAL ANALYSIS: AN EXAMPLE
 Financial Model
 Assumptions
 Income of the Product
 Direct Costs
 Indirect Costs
 5 Year Forecasts
 NAV
 ROI
49

50. 1. Background
PRICING STRATEGY
MUST FIND WAYS TO DRIVE DOWN COSTS AND OFFER LOWER PRICES OR EXPLORE CREATIVE
WAYS TO ATTRACT, RETAIN AND GROW YOUR CUSTOMER BASE, E.G. OFFERING LOYALTY
PROGRAMS, VALUE ADDED SERVICES, INNOVATIVE WARRANTIES
Cost Based:
• Fixed Costs
PRICE FOR PROFIT • Cost plus mark-up
• Still widely used
• Makes it easier to predict profit margins
Customer Focused:
• Penetrating pricing, e.g. “Special Introductory Offer”
• Used to encourage customers to switch to your product
PRICE FOR RELATIONSHIP • Associated with marketing strategy to increase market
share/sales volumes
• Price skimming, charge high prices before competitor
enters, e.g. LCD TV’s in early 2000’s
Competitive Pricing:
• Set price similar to competitors
PRICE FOR DEFENDING YOUR POSITION
• Differentiated strategy
• How thro VAS
50

51. 1. Background
RISK MANGEMENT
 Innovation entails RISK at any point or juncture, so invest in R&D as part of business objective
 If you are NOT innovate it is construed as putting your organization or business at risk
 As a leader or manager you must be alert to the following:
 Technological changes can blindside you so keep abreast of these changes in technology
 Financial investments can turn into RISKY investments if a project/product proves to be
too costly
 Protect your idea or IP
 Manage your business product line tightly
 An attitude of being the BEST can be a RISK, as you become complacent and
may drop the BALL on innovation or product lines
51

52. SESSION 4: Segmentation

53. VIDEO: MARKET
SEGMENTATION

54. OVERVIEW CHICKEN or THE EGG…
 Chicken or the Egg scenario, which comes first Strategy or Segmentation?
 Customer segmentation is the practice of dividing a customer base into groups of individuals
that are similar in specific ways relevant to marketing, such as age, gender, interests, spending
habits, and so on. Using segmentation allows banks to target groups effectively, and allocate
marketing resources to best effect
 Traditional segmentation focuses on identifying customer groups based on demographics and
attributes such as attitude and psychological profiles
 Value-based segmentation, on the other hand, looks at groups of customers in terms of the
revenue they generate and the costs of establishing and maintaining relationships with them
 Customer segmentation procedures include:
 deciding what data will be collected and how it will be gathered;
 collecting data and integrating data from various sources;
 developing methods of data analysis for segmentation;
 establishing effective communication among relevant business units (such as marketing and customer service) about
the segmentation; and
 implementing applications to effectively deal with the data and respond to the information it provides
54

55. SEGMENTATION GROUPS
Preferred
Downgrading Growth
Pattern
(Upgrading)
55

56. SEGMENTATION GROUPS - CORPORATE
Preferred
Downgrading Growth
Pattern
(Upgrading)
56

57. SEGMENTATION METHODS
 Geographic variables
 Demographic variables
 Psychographic variables
 Behavioral variables
57

58. SEGMENTATION CRITERIA - INDIVIDUALS
Geographic Will Demographic Will Psychographic Will Behavioral Will a
Variables ABC Variables ABC Variables ABC Variables bank
use use use use
them? them? them? them?
Region Yes Age/DOB Yes Personality ?? Product use Yes
Country Yes Gender Yes Lifestyle ?? Benefit sought Yes
Density/Suburb Yes Income Yes Value ?? Loyalty Yes
City/Town Yes Education Yes Social class ?? Credit use Yes
Postal code Yes Family size Yes Interests Yes
Occupation/Professi Yes Account bal. Yes
on
Nationality Yes Memberships Yes
Religion Yes Risk profile Yes
Language Yes
Marital Status Yes
Race Yes
Residential status Yes
58

59. SEGMENTATION CRITERIA - CORPORATES
Criteria Will ABC use the criteria?
Number of employees Yes
Industry Yes
Location Yes
Loan size (Use of credit facilities) Yes
Balance sheet size Yes
Company type (CC,Pvt) Yes
Profitability ??
Turn over ??
59

60. SEGMENTATION CODES/IDENTIFIERS
Segment Primary segment Code Sub segment codes
HNI/Affluent 100 101+
Rising Affluent 200 201+
Middle Class 300 301+
Large Corporates 400 401+
Small to Medium Enterprises 500 501+
Small Enterprises/Self 600 601+
Employed Professionals
60

61. CUSTOMER SEGMENTATION PROCESS
STEP 4 STEP 5 STEP 6
STEP 1 STEP 2 STEP 3
Assess which group Assess per group Create
Assess the value of Stratify or group
Define the full of customers to of customers the segments of
potential of the each customer customers based
target based on unique attitude customers
on their potential
market potential size, or behavioral with the
mix of usage potential revenue variables of same needs
(Life Time Value) and customers values and
share of voice
wants
How many Assess the relative •From where are the •Define the •Ego driven, $ Select the
customers are importance of new customers characteristics of driven, convenience segmentation which
there in the each customer in coming? (I.e. what each segment (e.g. driven, service most effectively
defined market terms of either the is the referral average driven, scientific groups customers
What (validate source) number of pattern / who refers? size/potential, key driven, etc... with the same needs
questions customers or Based on what? purchasing factors, Your segmentation
do I need usage •Identify in each ways should offer each :
to answer •through sales stratus the new Life to influence •Measurability - the
and what visits / Market Data Time Value of the decision making) size & purchasing
do I need •What is the market customer •what is the size of power of the
to do? we serve & who are •Which competitors each segment? segments must be
all the customers are targeting these •Is it homogenous? measurable
who may benefit same customers? •How do •Accessibility - it
from our product? salespeople must be possible to
Are we missing any interact with reach & serve the
customers (I.e. customers in the segment
those traditionally market and what
•Substantiality - the
served by our are the key market
segments must be
competitors)? drivers?
large & profitable
61

62. CUSTOMER SEGMENTATION PROCESS
STEP 7 STEP 8 STEP 9 STEP 10 STEP 11
Validate the selected Target the most Which product / Decide on product Develop for each
segmentation attractive segments brand is being used positioning for customer in targeted
approach based on potential by each customer in each of the segments a plan with
size and potential target segments targeted segments an objective , tactics
revenue (validate sources) and action plans.
Consider •How easy will it be to · Check whether needs
supporting convert customer in are being addressed
evidence for your each segment
segmentation segment to our • How to overcome
products? the hurdles for using
What Does the market
•How responsive is our products ?
questions really work the
do I need way you have the segment to
marketing actions? • Assess cost for each
to answer segmented?
action plan and decide
and what •Are the most •What would be the
whether it is feasible,
do I need successful cost of serving the
to target the segment
to do? competitors taking segment?
a different •How are the •Review regularly
segmentation competitors targeting whether the needs
approach? these customers? and wants are
•What market data •Evaluate satisfied profitably
do you need to attractiveness of each
confirm current segment •Review regularly the
segmentation? size of the segments,
the needs and wants
of each customer.
62

63. MANDATORY FIELDS - INDIVs
Personal details
 Title
 Surname
 Middle names
 First name
 Gender
 Date of birth
 Residential status
 Home address
 Home telephone number
 Period at this address
 Postal address
 Country of residence
 Nationality
 Business Telephone
 Cellphone number
63

64. MANDATORY FIELDS - INDIVs
Personal details cont,
 E mail address
 ID number
 Passport number
 Expiry date
 Driver’s licence number
 Marital status
 Number of dependents
 Spouse’s name
 Spouse’s employer and address
 Preferred method of communication
64

65. MANDATORY FIELDS - INDIV
Employment details
 Current employer and address
 Type of employment
 Occupation/Profession
 Occupation Title
 Length at current employer
 Monthly income
 Method of payment
 Banking details
65

66. MANDATORY FIELDS
Previous employment details
 Name of previous employer
 Address of previous employer
 Occupation title
Next of kin
 Address of next of kin
 Relationship
 Declaration
 Signature and date
66

67. OPTIONAL FIELDS - INDIVs
 Level of education
 Family size
 Religion
 Home language
 Race
 Social memberships
 Interests/hobbies
 How did you come to know of ABC?
 Consent for ABC and associate companies to market other products
67

68. MANDATORY FIELDS - CORPORATE
 Company Name
 Company address
 Postal address
 Telephone numbers
 Nature of business
 Contact person
 Contact details (e mail,telephone,cell phone)
 Designation of contact person
 Company registration number
 VAT registration number
 Directors
68

69. SEGMENTATION MONITORING TOLLS
 Assessment
 Observation
 Statistics
69

70. SEGMENTATION MATRIX
Business
line Retail Banking Corporate Banking
Personal Private Profes- SME Financial Government
Segment Companies Non Gov.Org
Banking banking sionals Banking institutions Org
Doctor
Local Banks Churches Provinces
Blue Main Dentist Micro Medium
Foreign Embassies Regions
(Mass) customer Pharmacist enterprises corporate
Banks Trusts Towns
Vets
Leasing Donor Org
Lawyer
Silver Family Small Large Insurance Pvt Schools Cities
Notary
(Top Mass) Cluster enterprises corporate Micro Pvt Hospitals
Other
Finance
Geologists Pension
Sub Medium Pvt
Gold Architects Multi Funds Gvt Hospitals
Segment size Universities
(Affluent) Engineers nationals Asset Mgrs Gvt Schools
enterprises MBA Schools
Accountants Building
Auditors Gvt
Societies Charitable Org
Bus.& Fin. Universities
Investment Civic Bodies
Consultants Other Gvt
Banks Other NGOs
Orgs
Other FIs.
Sports-
Persons
Journalists
70

71. CATEGORIES
Group Definition
Child 0-12 years
Youth 13-18 years
Student 19-28 years
Employees Any applicant who has an employment contract.
Housewives Non working spouse
Unemployed Unemployed (not self employed)
Self employed Any applicant who generates their own income for survival
XYZ employees Anyone employed by ABC
Associated Company employees Employees of ABC sister companies
Pensioners Former ABC employees who have retired
Gvt employees Any persons employed by Government (Civil servants)
Executives COOs, CEOs, CFOs, MDs, Executive Directors, GMs, FDs,
MBA/MBL/DBL Any MBA/MBL/DBL graduate
Professionals See list of professionals
Politicians Any persons holding a position of authority within a Political Party (Full time)
Pensioners Any person who has retired from formal employment and receives a pension.
Civil Leaders Civil Society Leaders, e.g. Mayors, Councillors, Judges, Magistrates,
Other
71

72. INDUSTRIES & SEGMENTS
Real state Developers Estate Agents Prop.Mgrs Construction Prop.Inv.Cos
NGOs Donors Churches Embassies Civic Groups
Education Universities Colleges Schools Kindergartens MBA Schools Libraries
Fin.Services Local Banks Foreign Banks Building Insurance Leasing Asset Managers
Societies
Traders Food Clothing Building Drugs Supermarkets Households
Materials
Agriculture Crop Farming Livestock Forestry Horticulture Grains and Fertilizer
farming And Logging Oils seeds companies
Mining Precious Quarry Mining Natural gas
stones
Media Publishing Media houses Advertising Broadcasters
Houses
Transport Car Fleet owners Car plants Storage Car hire Container
Dealerships And Transport Leasing
Tourism Hotels Lodges Airlines Travel agents Restaurants Safari Camps
72

73. SEGMENTATION CRITERIA – SME & CORP
No of
Loan size employees Turnover
Sector if
Segment Sub segment from up to from up to from up to applicable
Micro enterprises $0 $10 000 0 10 $0 $40 000
Small enterprises $10 001 $100 000 11 25 $40 001 $400 000
Medium size
SME enterprises $100 001 $250 000 26 100 $400 001 $1 000 000
Medium corporations $250 001 $500 000 101 250 $1 000 001 $2 000 000
Large corporations $500 001 $1 000 000 251 500 $2 000 001 $4 000 000
Corporate Multinationals $1 000 001 501 $4 000 001
73

74. SEGMENTATION CRITERIA – PERSONAL & PVT
Income Liabilities Assets
Group if
Segment Sub segment from up to from up to from up to applicable
Blue $0 $1 500 $0 $10 000 $0 $20 000
Personal
banking
Silver $1 501 $5 000 $10 001 $20 000 $20 001 $50 000
Gold $5 001 $20 000 $20 001 $100 000 $50 001 $200 000
Private Platinum $20 001 $40 000 $100 001 $500 000 $200 001 $1 000 000
banking
Super Rich $40 001 $500 001 $1 000 001
74

75. CUSTOMER SEGMENTATION MODEL
Entry Level Banking up to Retail Affluent Segment
Wealth Absa retail acc
R15m NIA customer base2
Private Bank
R650 000 pa
Retail Affluent
RA
R300 000 pa
290 969
Prof’s
63 400
New to bank customers
Staff
49 629 R120 000 pa
CMM
3.6m
f
af
Se
St
M
th
n
LS
io
u
Core Middle
Yo
r s
n/
Market Seniors
io
1.32 m
at
Students R36 000 pa
Students
ti c
105 000
is
ph
Youth
so
490 000
al
Entry-level banking
i
nc
ELB
na
3.79m
Fi
New to bank customers
GRCB Lead Generator
Black diamonds
Unbanked
Conference, London, 18Lending
Micro & 75
Note: 1
Source: Primary Bank Relationships – Amps ‘07 19 May 2008
2
Source: Absa Internal reflecting all relationships: Dec 2007

76. SESSION 5: Market Research Techniques

77. MARKET RESEARCH TECHNIQUES
•Structured questionnaires
• 1 to interviews
• Structured
• Telephone
SURVEYS • Objective
• Mail
• Larger the sample the
• Online
better the results
• Structured
FOCUS GROUPS • Group setting • Focused discussions
• Observations
• Personal biasness
PERSONAL INTERVIEWS • 1 to 1
• Less objective
• “Real’ results
FIELD TRIALS • New product • Help to modify product
• Interact with segement/s
77

78. WHY DO MARKET RESEARCH ????
UNDERSTAND
FIND THE GAP OTHER SUB-
SEGMENTS
TO
CONTINUALLY
IMPROVE
TEST YOUR ITS ABOUT
ASSUMPTIONS DIFFERENTIATION
78

79. GAME 3

80. SESSION 6: Some Examples on Innovation and
Product Development

81. MOBILE SALES CAPABILITIES & DEPLOYMENT
Segmented Distribution Channel focus providing multiple options of delivery
Entry Level Entry Level Workplace Banking Banks on Wheels
Banking Banking Kiosks (BOW’s)
External Sales Points Mobile Sales Units Focus: Worksites Focus: ELB and CMM
(ESP’s) (MSU’s) Core Middle Market at Events, Worksites,
Focus: Branch Hot Spots Focus: Townships Branch Support
Comprises: Comprises: Comprises: Comprises:
•Gazebo •Mercedes Sprinter •Large Kiosk •VW Crafter
•Digital pens (2) •Gazebo •Generator •Generator
•POS device •Generator •Remote opening kits (2) •Combination TV and Video (CET)
•Tables (2) •Combination TV and Video (CET) •Digital pens (2) •PA System
•Chairs (7) •Remote opening kits (2) •POS device •FBSS Workstations (2)
•Marketing materials •Digital pens (2) •3G printer/Fax/Scanner •Fully functional ATM
•Promotional materials •POS device •Marketing materials •Marketing materials
•Card and Pin Mailers •Tables (2) and Chairs (7) •Promotional materials •Promotional materials
•3 DSA’s per team •Marketing materials •4 FTE’s per BOW
•Team Based Targets and •Promotional materials •Chairs and Umbrella’s
Incentives •Training ATM
•6 DSA’s per team
Functionality: Functionality: Functionality: Functionality:
•Account opening •Account opening •Account opening •Account opening
•Basic Enquiries •Basic Enquiries •Basic Enquiries •Basic Enquiries
•Mini Statements (future) •Mini Statements (future) •Mini Statements 81
•Mini Statements
•Prepaid purchases (future) •Prepaid purchases (future) •Prepaid purchases •Prepaid purchases

82. ABSA MOBILE CHANNELS
82

83. COMPETITORS MOBILE CAPABILITIES
83

84. MOBILE BANK ON WHEELS (BOW)
84

85. TECHNOLOGY & ENABLEMENT
Optimal technological enablement solution per segment
Technology Solution Targeted Areas Status Medium Term View
Digital • Entry Level Banking • LAUNCHED • Implement nationally
Pens • ESPs
• WPB Kiosks
Laptop • Core Middle Market • LAUNCHED • Implement nationally
Kits • Retail Affluent
• Islamic Banking
• Mobile Sales Units
• Bank on Wheels
Card and • All NBS sales • LAUNCHED • Full implementation
Pin environments
Mailer
Other • Entry Level Banking • IT LITE SOLN • Introduce alternative devices
Devices LAUNCHED
Fulfilment • All NBS sales • INTEGRATION • Implement ED
Portal environments

86. ENABLEMENT FULFILMENT PLATFORM
Technological Integration ensure a seamless end to end Sales fulfilment process
Note: Integrated Service – accessed by AGO, NBS Support hubs, other SBU’s and
ES & WPB Sales Consultants

87. LARGE KIOSKS
87

88. SMALL KIOSKS
88

89. BANK IN A BOX
89

90. BANK IN A BOX
90

91. PRODUCT PROPOSITION: A MODEL

92. PRODUCT PROPOSITION: Model Defined
CORE DETAIL DEFINITION
Define the nuances of the target segment
POSITIONING
(Private, Gold, Silver)
Price for profit, per segment, risk, and
PRICING
standardisation
CUSTOMER NEEDS Positioning to the needs of Private, Gold, Silver
PRODUCT DIFFERENTIATORS Key USP for each segment
Key benefits distinctive to the segment (cascade
DIRECT BENEFITS
effect)
DISTRIBUTION Channels and acquisition strategy
Over and above the key benefits, e.g. through a
VALUE ADDS
country partner
Products offered to spouses and immediate
SECONDARY PRODUCTS
family members

93. Private Bank Card Holder
Prepared for Client Name
Your name here
Date

94. PRIVATE BANK CARD: THE POSITIONING
WHO IS THE High Net worth Individual, earning...
PRIVATE CLIENT
? Employed or Self Employed
Well Informed & Networked
Travels Locally & Internationally
Ambitious and Focused
Family
Travels extensively
Has Hobbies, e.g. Golf
Technology Savvy
12/10/29

95. PRIVATE BANK: CUSTOMER NEEDS
Offering the high-net worth
I NEED POSITIONING individual a dedicated service and
some exclusive benefits
The transactions must be smooth
and fast, and when I encounter a
CONVENIENCE
problem I want to reach someone
to assist me 24 hours
To be able to buy what I want,
EMPOWERMENT where I want, as I travel the
country and the world
INTERNATIONAL Access to local and international
Catered to the needs of TRAVEL lounges and boardrooms
Private
Bank Clients in Africa & Dedicated Private Bank
DEDICATED
Globally Relationship Manager to assist me
SERVICE with my needs and problems
To know that if something
PROTECTION happens during my travels I’ll be
protected
12/10/29

96. PRIVATE BANK: PRODUCT DIFFERENTIATORS
EXCLUSIVE Full spectrum of the retail discounts and
value adds offered through Value Choice
BENEFITS and Other
• 55 days interest free purchases
• Access to credit 24/7/365
• International acceptance at ATM’s, POS
CONVENIENCE and internet
•24/7 customer service
• Concierge services
• Free POS purchases & secondary cards
EMPOWERMENT • Minimum spend limit *******
• International acceptance
• Priority Pass: Standard Plus benefit
INTERNATIONAL embedded. Option to upgrade to Prestige
at $150 per annum
TRAVEL • Regus Lounge: Access to business facilities
I WANT globally. Embedded value, $********
DEDICATED Private banking suite with dedicated
SERVICE Relationship Manager
Free lost card protection and travel
XYZ Private Card delivers the
insurance. Optional upgrade to
benefits & enhancements desired PROTECTION comprehensive travel insurance. Free
by the Private Bank Client insurance for Laptops, I-Pads

97. PRIVATE BANK: BENEFITS
CORE CARD BENEFITS DETAIL
Local lounge access C
Priority Pass global lounge access O
Visa Hotel Club
Visa Luxury Hotel Collection C
Viisa GO Explore C
yQ C
Exclusive books discounts in SA ONLY NC
I WANT
Regus Business lounge NC
Visa Golf Access C
Insurance for Laptops, I-Pads NC
Travel Insurance* C
Upgrade to Comprehensive Travel Insurance O
Visa International Concierge Services O
Free Lost card protection C
Free secondary card/s C
Embedded insurance for Indiv and family NC
Pre-approved UPL’s
Avis C
SBAF Private Card delivers the
Chic Retail Shopping C
benefits & enhancements desired
Macy’s Retail C
by the Private Bank Client

98. PRIVATE BANK PRODUCT PROPOSITION
Core Product Features Product Delivery model
• Free Laptop & I-pad insurance
• POS
• Priority Pass The Private Bank • Dedicated Private Bank suites
• Regus business lounge
• Visa Hotel Club Credit Card • Local country branches
• Call centre
• Visa Luxury Hotels
• ATM’s, Internet
• Visa GO Explore
• YQ
• Visa Golf Access
• Travel Insurance Value-added Services
• Avis
• Chic Retail Shopping • Free SMS notification
• Macy’s retail discounts • 55 day interest FREE
• Access to credit 24/7/365
• International acceptance at ATM’s, POS, Internet
• Free POS purchases
Segment • FREE secondary cards
• Free lost card protection and travel
• Private Bank Salaried or Self- XYZ Private Card
Employed Customers
delivers the
• Earning between……… Regus Business Lounge
benefits &
enhancements desired • Global access to business offices, lounges
by the Private Bank • Safe and convenient to do business
Benefits to the Private Bank • Professionally positioned and well equipped
Customer Client
• Latest infrastructure
• A single internationally accepted plastic • Take your business office internationally
(top of wallet)
• Provides additional value, utility and
flexibility to retailer customers
• Convenience and confidence in
universal acceptance of credit card
payment and financing mechanism
• Additional value through partners

99. CARD MATRIX: BENEFITS
SB CORE CARD BENEFITS PRIVATE GOLD SILVER
Local lounge access C C
Priority Pass global lounge access O O
Visa Hotel Club C
Visa Luxury Hotel Collection C C
Viisa GO Explore C C C
yQ C C
Exclusive books discounts in SA ONLY NC NC
Regus Business lounge NC O I WANT
Visa Golf Access C O
Insurance for Laptops, I-Pads NC C
Travel Insurance* C C
Upgrade to Comprehensive Travel Insurance O O
Visa International Concierge Services O
Free Lost card protection C C C
Free secondary card/s C C C
Embedded insurance for Indiv and family NC NC C
Pre-approved UPL’s NC
Avis C C C
Chic Retail Shopping C
Macy’s Retail C C C

100. VISA CARD MATRIX: BENEFITS
PREMIUM PRODUCTS
CORE CARD ENHANCEMENTS & INSURANCES CLASSIC/SILVER GOLD PLATINUM INFINITE
Global Cardholder Assistance Service (GCAS) C C C C
Medical and Legal Referral C C C
Purchase Protection C C
Extended Warranty C C
I WANT
Crisis Response C
Multi-trip Comprehensive Travel Insurance C
Loss of Baggage C
Personal Accident C
Trip Cancellation C
Evacuation and Repatriation C
Travel / Baggage Delay C
*Coverage varies by product.
C = Core Card Offering
E-Exclusive, S-Selected, L-Limited
12/10/29

101. VISA CARD MATRIX: BENEFITS
PREMIUM PRODUCTS
CORE CARD BENEFITS* CLASSIC/SILVER GOLD PLATINUM INFINITE
Global Merchant Offer Program C C C C
Visa HotelClub C C C C
Visa Golf Access C C
Visa Airport yQ (meet and assist service) O O
Visa Luxury Hotel Collection C C
Visa Private Villas C I WANT C
Visa Escapes C C
Visa Airport Lounge Access O O
Visa Concierge C
Visa Golf Access (free golf benefit) C
Visa Ticket Exchange C
*Coverage varies by product.
C = Core Card Benefit
O = Optional Value Added Benefit with Issuer and/or Cardholder Fee

102. Visa Infinite Card
Prepared for Client Name
Your name here
Date

103. INFINITIE CARD: The Positioning
WHO IS THE
High-net worth individuals
INFINITIE
CLIENT ? $1 million under asset management
Well Informed, older, self made
Travels Locally & Internationally
Ambitious and very successful
Family or Single
Has Hobbies, e.g. Golf
Technology Savvy
Not easily swayed by luxury brands

104. INFINITE CARD: Customer Needs
Key points
The Customer Service the ‘HNI” segment with
Need
I NEED POSITIONING bespoke service and exclusive
benefits
The transactions must be smooth
and fast, and when I have a
CONVENIENCE
problem I want to reach someone
who will be on my side
To be able to buy what I want,
EMPOWERMENT
where I want around the globe
INTERNATIONAL Access to local and international
TRAVEL lounges and boardrooms
Catered to the needs of the
Infinite Card in Africa & Recognition of my value as a
Globally PRESTIGE & customer with personal service.
EXCLUSIVITY Invite me to exclusive events. Help
me enjoy my life with luxury
To know that if something
PROTECTION happens during my travels I’ll be
protected
12/10/29

105. INFINITE CARD: Product Differentiators
SBAF may choose to offer rewards to the
REWARDS
I WANT infinite cardholder
• International lounge access
• Dispute resolution
CONVENIENCE • Lower referral and higher authorisation
• 24/7 customer service
• Minimum spend limit $20, 000
• No preset spending limiit
EMPOWERMENT • International acceptance
• Year-end summary
INTERNATIONAL • Embedded lounge access
• Regus Lounge: Access to business facilities
TRAVEL globally. Embedded value, $********
At a dedicated country branch and via the call
SERVICE centre 24/7
Travel accident insurance US$1,000,000
Comprehensive travel insurance benefits
Infinite Card delivers the Emergency evacuation and repatriation
benefits & enhancements desired PROTECTION Travel and emergency assistance services
by the High-net worth Segment Purchase security
Client Emergency card replacement/cash
disbursements

106. INFINITE CARD: Benefits
Key points
Core Benefits INFINITIE CARD BENEFITS DETAIL
Global Merchant offer program 
Visa Hotelclub 
Visa Golf Acces 
Visa Airport yQ (meet and assist service) 
Visa Luxury Hotel Collection I WANT

Visa Private Villas 
Visa Escapes 
Visa Airport Lounge Access 
Visa Concierge 
Visa Golf Access (free golf benefit) 
Visa Diamond Air 
Visa Ticket Exchange 
SBAF Private Card delivers the
benefits & enhancements desired
12/10/29 the Private Bank Client
by

107. INFINITE CARD: INSURANCE BENEFITS
INFINITI CARD BENEFITS DETAIL
Global Cardholder Assistance Service 
Medical and Legal Referral 
Purchase Protection 
Extended Luxury 
Crisis Response I WANT

Multi-Trip Comprehensive Insurance 
• Loss of Baggage 
• Personal Accident 
• Trip Cancellation 
• Evacuation & Repatriation 
• Travel/Baggage Delay 
SBAF Private Card delivers the
benefits & enhancements desired
by the Private Bank Client

108. INFINITE CARD: INSURANCE BENEFITS
I WANT
SBAF Private Card delivers the
benefits & enhancements desired
by the Private Bank Client

109. INFINITE CARD PRODUCT PROPOSITION
Core Product Features The Infinite Credit Card Delivery Model
• Global merchant program
• Dedicated wealth managers
• Visa Hotelclub
• Visa golf access
• Visa yQ
• Visa luxury hotel collection
• Visa private villas
• Visa escapes
• Visa airport lounge access
• Visa Concierge Services
• Free golf benefits
• Visa Diamond air • Visa accredited and related programs
• Visa ticket exchange • Hilton Hotels gold membership
• Harrods black reward card (10% discount, coffee,
free alterations)
• yQ Meet & Greet
Segment • Diamond Air International
• Exclusive South African Benefits
• High netwoth individuals with Infinite Card delivers the
asset under management of $1
benefits & enhancements
million Regus
desired
by the Client • Unlimited Global access to business offices, lounges
• Safe and convenient to do business
Benefits to the Infinite Segment • Professionally positioned and well equipped
Customer • Latest infrastructure
• Exclusive and bespoke • Take your business office internationally
benefits/service
• Prestige and exclusivity
• Convenience
• Unlimited access
• Excellent travel insurance/s

110. CREDIT CARD: DELIVERY & CHANNELS
CHANNELS PRIVATE GOLD SILVER INFINITE
Country Branch Network   
Private Bank Branches 
Branch Relationship Managers  
Private Relationship Managers 
High Network Portfolio/Managers 
Visa Platform  
Kiosks    I WANT
ATM’s   
Call Centre   
Client Appreciation Events   
POS    
In-Country Partners 
Direct Sales Agents 
Internet Services    
Cell-phone Banking    
Interactive TV  
Work Place Banking   
Global Partners 

111. CORPORATE CARD PRODUCT PROPOSITION
Core Product Features The Corporate Card Delivery Model
• Comprehensive Global Insurance • SBAF supported through AMEX Globally
• One Account • Branches
• One Settlement • Corporate Relationship Managers
• Currency of choice to purchase and
settle
• Complimentary Rewards Progam
• Retail Discounts
• Technology Discounts Services
• Access to Proffered Hotels
• Access to International Airlines
Segment
• Corporate clients with more than The Corporate Card
50 employees
delivers the
Other
benefits & enhancements
desired •
by the Client
Benefits to the Corporate Customer
• Exclusive and bespoke
benefits/service
• Recognition & Rewards
• Convenience
• Unlimited access
• Excellent travel insurance/s

112. FULL SPECTRUM OF CARDS IN COUNTRY
SBAF - CARD COUNTRY PRIVATE GOLD SILVER INFINITE AMEX
KENYA
NIGERIA
UGANDA
I WANT
NAMIBIA
MOZ
BOTS
SWAZ
LESOTHO
ANGOLA
12/10/29

113.  Day 2
 Session 1: New Product Development Process
 Session 2: Case Study: Creating the Best Product /Service for
Business
 Session 3: Packaging the New Product
 Session 4: Case Study of Product Launch
 Session 5: Product Lifecycle and Prolonging the Products Lifecycle
 Session 6: Innovation & ‘Ethic’

114. 114

115. VIDEO: BMW ADVERT

116. SESSION 1: New Product Development Process

117. 1. Background
NEW PRODUCT DEVELOPMENT PROCESS
• Firstly, introducing NEW products is critical to the
success of any organization and including Banks
• Product Managers should follow a set process when
implementing NEW products
• The 7 step process will comprise the KEY elements of
new product development
• These steps are crucial to help make informed decisions
• The process also shows the importance of market
research plays in developing and shaping NEW product
development
117

118. 1. Background
PRODUCT DEVELOPMENT PROCESS STEPS 1-3
STEP 1: THE IDEA GENERATION
• Requiring the gathering of ideas to be evaluated as potential product options
• Must be an ongoing process with contributions from internal & external sources
• Many market research are used to gather ideas, e.g. focus groups, channel members, Banks sales
staff, customer comments, etc
• Gaining insight on competitor products through secondary data sources
• One important research technique used to generate ideas is brain storming where creative thinkers
from inside and outside share ideas
• Remember it is important to table many ideas as this will SPARK THE IDEA
• Also use Mind-Mapping to set out product development
STEP 2: SCREENING
• Ideas generated are evaluated against feasibility
• Screening can be done in hierarchal rounds involving the CEO, CFO, COO etc, on the feasibility of
NEW product
• Detailed screening will be followed through advanced research techniques
• Once an idea/s are tabled, do a ROUGH ESTIMATE on SALES, COSTS, PROFIT, MARKET SHARE,
CUSTOMER NUMBERS
• Once an idea is accepted move onto step 3
118

119. 1. Background
PRODUCT DEVELOPMENT PROCESS STEPS 1-3
STEP 3: THE IDEA GENERATION
• Focus groups are convened where the product idea is presented to a group in the form of a
CONCEPT BOARD PRESENTATION (i.e. story board)
• EG, customers are shown the concept board depicting drawings of the product idea or can present a
mock-up version that is NOT functional
• Here you must get feedback from the customer segment on the likes and dislikes of the product in
terms of the PRICE, PACKAGING, FEATURES, EASE OF USE, etc
• IOW, you want feedback if the customer will buy the product and frequency thereof
119

120. 1. Background
PRODUCT DEVELOPMENT PROCESS STEPS 4-5
STEP 4: THE IDEA GENERATION
• At this stage the product idea has been narrowed down to 1-2-3 etc
• More important is market research as efforts are made to analyze viability of product idea
• Key objective, to obtain useful forecasts of market size, costs, sales volumes, financial projections,
etc
• Key objective to ascertain if overall product fits into the companies overall mission/vision (balanced
scorecard)
• Emphasis on external research, surveys, secondary research, competitor analysis
• Emphasis on internal research, historical data, customer data, segment data
STEP 5: PRODUCTION & MARKETING MIX DEVELOPMENT
• Initial prototype of the product emerges
• Start developing the marketing mix strategy, 4P’s
• Get feedback/insight from customers as they will have a ‘live’ product
• Customer feedback will help refine product and marketing mix before launch
• Refine the marketing mix
• Yippeeeee…FINALLY…..WE LAUNCH…..4/3/2/1…
120

121. 1. Background
PRODUCT DEVELOPMENT PROCESS STEPS 6-7
STEP 6: MARKET TESTING
• Can go straight to commercialization or
• Restrict the launch to a smaller geographical area & target segment
• Many ways:
• Simulation
• Build a live test site
STEP 7: COMMERCIALISATION
• Launch to a wider audience
• Roll-out strategy
• Phased approach so as to ensure production is controlled and relevant changes to the marketing mix
121

122. SESSION 2: Case Study: Creating The Best
Product/Service for Business

123. 1. Background
SOME CASE STUDIES
CASE STUDIES:
1. Case Study 1
2. Case Study 2
3. Case Study 3
123

124. SESSION 3: Packaging the NEW Product

125. 1. Background
PACKAGING THE NEW PRODUCT: THE LAUNCH
• So we have done our homework through the Product Development Process
• NOTE: Many NEW products are launched daily, so competition out there is stiff!!!!
• So think carefully of your LAUNCH STRATEGY:
Study the Competitors
• Look at the competitors, SWOT analysis
• Review their marketing strategy
• List the banks that offer the product or service
• Put yourself in the customer shoes…ask questions,
WHY choose your product?????
• What will attract the customer to take up the product
or service????
• Evaluate HOW your product will stand out from the
competition, WHAT WILL YOUR PRODUCT UNIQUE
125