EXECUTIVE SUMMARY

The purpose of this report is to analyse and evaluate the effectiveness of the marketing
strategies adopted by ING direct to increase the market share in Australian banking sector.

This analysis, including a supporting literature review, demonstrates that ING DIRECT is
well place to achieve its strategic object of acquiring at least a 10 per cent market share of
retail savings accounts in Australia. It offers a good range of products like savings account,
mutual funds, insurance and mortgage loans. Marketing strategies such as Market- nicher
Strategy, Competitive strategy, and Growth Strategy are discussed and analysed in this
report.

The report is based on the research and evaluation of ING Direct marketing strategies. It
follows basic three winning strategies: It covers three basic competitive winning strategies: a)
Overall cost leadership, b) Differentiation, and c) Focus. The detail discussion will be done
further in the report regarding these strategies and their implications. The report concludes
with the findings and the recommendations of the marketing strategies. We discuss the
current situations of these functional units and their implications to the future. The report
concludes with recommendations to capitalise on the market and to achieve its long term
goals.

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1.0 INTRODUCTION
ABOUT ING GROUP:

ING Direct was established in 1997 by Arkadi Kuhlmann as an online (branchless) bank.
The whole idea started with the zeal to do things differently and help the customers who are
fed up with the idea of going to the branch and standing in a line. With the help of the
electronics they save the time of the customers and their money (Khulmann, 2009). The bank
offers basic and transparent products like basic savings account with no charges and high
interest rate, loans etc. ING Direct believes in providing the exemplary services, convenience
and competitive prices to the customers (Source: ingdirect.com).

Ever since the operations started there has been a consistent growth in the company’s
performance. Marketing Strategies and the revolutionary approach are the reasons for the
growth of the company (Breen, 2011).

ABOUT ING DIRECT:

ING Direct started its operations in 1999, and quickly became the fifth largest retail bank in
Australia. Today ING Direct is leading direct savings bank, which is active in 9 countries
with more than 1.4 million customers, $ 23 billion in deposits and more than $ 37 billion in
mortgages (Breen, 2009). ING Direct believes in encouraging the customers to save. It keeps
its overheads low by doing the business online, and over the phone, so that it can pass on the
savings to the customers in the form of competitive rates. The products of the ING Direct are
limited with simple liners: “High interest rates, no fees, no minimums, free fee”. They have
their own unique approach in marketing.

2.0 MARKETING

Kotler et al. (2010, p. 5) describes Marketing as ‘an organisational function and a set of
processes for creating, communicating and delivering value to the customers and for
managing customer relationships in ways that benefit the organisation and its stakeholders.’
The goal of marketing is to attract new customers by promoting and promising superior value
and to keep the current customers by delivering the satisfaction.

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3.0 MARKETING STRATEGIES IN ING DIRECT

A marketing strategy can be developed only when the firm or a company understands the
customer and the market place. Their main focus was on meeting the needs of the customers
by offering the high interest rates and quality service (Levitt, 1960). Their marketing reflects
pure banking with no dishonour fees or hidden costs (Kotler et al. 2010).

The challenge the banking sector faces is to differentiate themselves by offering different
services or products for the consumers and to attract new customers. ING Direct always had
an innovative approach towards marketing their products which has differentiated them from
the other banks (Kotler et al. 2010). It’s a pure bank which follows the simple lines like free
fee, no fees, no minimums and high interest rates.

The marketing strategy of the ING Direct is very simple and clear. ING Direct’s marketing
strategy was the combination of various strategies. Marketing strategies such as, Competitive
strategy, Market- nicher Strategy, Revolutionary approach and Growth Strategy are used.

4.0 COMPETITIVE STRATEGIES:

Kotler et al. (p.106, 2010) states that overall cost leadership, differentiation and focus are the
three winning strategies that any organisation or a business should follow to stand against the
competitors and to have a competitive advantage. The consistent growth of the ING Direct
was possible, as they have differentiated themselves from their competitors in the marketing
strategies they have used. The following are the few strategies they have used:

MARKET NICHER STRATEGY:

The ING Direct when it stated its operations it has targeted the specific product niches rather
than competing with the other big banks in Australia. This bank does not offer the credit
cards as their products to the customer which is a very big market in the Australia (Kotler et
al. 2010). Limited products were offered, no credit cards, no face to face contact with the
customer and service offered via phone or other intermediates (ABA Banking Journal, 2003).
By focusing on the limited products that the bank offers to the customers, they have become
the largest savings maximize bank of all the other Australian Banks. And they have earned a
great market share in the Australia. What is appreciated is the way the bank kept its
consistency in delivering the customers the service (Neilson Financial Services, 2009).

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COMPETING IN VALUE

The bank has improved the quality by focusing on the core products and customer service.
According to (Neilsen financial services, 2009) ING Direct tops the customer satisfaction
rating compared to the other banks in Australia. Maintaining the customer satisfaction was a
challenge for the bank and they have kept it consistent. The customer satisfaction is
consistent because the bank knows what their customer needs or expects (Ferrell et al. p.105,
2002).

5.0 ANALYSIS OF FOUR P’s:

Kotler et al. (p.89, 2010) states ‘the set of controllable marketing variables that the company
blends to produce the response it wants in the target market.’ The tools that are used for
achieving company’s targets are Product, Price, Place and Promotion.

PRODUCT:

The ING Direct has those products that are needed by the customer. Savings Account,
Insurance, Investment and Mortgages are the main products of the ING Direct. The products
are limited when compared to the traditional banks. According to Kulhmann, “Credit cards
are the opium of consumerism.”(Cocheo, 2002).

PRICE:

Price is usually fixed according to the cost expectations of the customer. ING has consistently
maintained its pricing strategy by offering the customers low interest rates on the loans and
high interest rates on the savings account (Kotler et al. 2010).

PLACE:

It’s a branch less bank operating only electronically. The bank is operated on the internet and
via phone. This kind of operations started with an idea to save the time and the money of the
customers. This might also be a disadvantage for not having a face to face communication
with the customer (Kotler et al. 2010).

PROMOTION:

ING Direct uses innovative and new ideas when it comes to promotions or advertising. They
have promoted their products with the help of the YouTube and Face book (MCGEER,
2010). According to TNS Media Intelligence, the company has spent $ 13.6 million for the
overall marketing and advertising. It has used all sorts of Medias like commercials on spot,
TV, internet (Sanders, 2003).

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REVOLUTIONARY APPROACH:

In today’s fast world, people are in a hurry with less time for everything. Keeping the new
revolution in the mind the ING Direct has come up with the best strategy of banking
operations. It had designed its bank branchless by making everything electronic. By doing
everything online it has cut out the operational expenses. It is the first bank which made the
online savings look so cool and popular. The online savings account doesn’t have any
charges. ING Direct has set the standards in such a way that it became the leader and the
other banks followers (Kiplinger, 2007).

GROWTH STRATEGY

The factor behind ING Direct growth is its commitment to selling. They believe in focusing
on the ‘smart sell’: bringing in the customer assets from other banks and ideally, helping
them to earn better returns. The growth of the ING Direct is mainly depends on the
employees. According to Kelly, ING Directs executive VP of sales, they hire people who
have a winning attitude and like to work in a group rather than a bunch of people who follow
the script. The employees play a major role in the growth of any company (Scott, 2003).

6.0 ALTERNATIVE MARKETING STRATEGY:

PRODUCT BUNDLING STRATEGY:

The product bundling can be done to increase the customer value. When ING Direct starts a
new product and wants to market it then they can use the product bundling strategy for the
promotion of the new product. In this way the bank is promoting the service and the product
(Wappling et al. 2010).

7.0 ANALYSIS AND RECOMMENDATIONS:

ING Direct gained strategic advantage by offering the products that are opposite to what the
competitors are offering. While all the other banks were encouraging the customers to spend
money, ING Direct came up with a total different concept of savings, which allowed it to
stand out in the crowd and be seen as different. Its idea was to position their offers against
their competitors’ offers in the minds of customer. They have come up with an idea of cafes
where the customers and the bankers can have a face to face communication (Sanders, 2004).

The one big problem at ING Direct is to handle 80% of calls in 20 seconds by the employees
who work in the call centre. They have to come up with a strategy like minimum time spent
on a call and should work on with the marketing department as well (Scott, 2003).

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The huge investments done by the ING Direct on the marketing and the advertisements had
returned the investments by capturing the great space of the market. Now as the brand name
of the ING Direct is established and well recognised worldwide they don’t have to focus on
the advertising for a while and it should focus on the new products that the bank could offer
to the customers.

The ING Direct should also find a solution for the numerous calls that they have to attend in a
day. They might lose the costumer if the calls are not attended at time. After all the service is
the core principle of any business.

8.0 CONCLUSION:

The study has examined the marketing strategies of the ING Direct. With the consistent
growth of the company the bank exhibits that the strategies used were cost effective and have
a great recognition for the products that are being offered by them. The findings of this study
showed how each of the products has its own competitive advantage against the other
banking products. The findings also show that the customer satisfaction and the service
offered is the main objective of the ING Direct. It has received awards for the highest
customer satisfaction in the banking sector.

Though the products were successful, ING Direct has to start exploring the market with the
new launch of the products like credit cards or cash cards. It can also take few alternative
strategies into consideration to find the solution for the few problems that were discussed in
the report.

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Andrew, B. Clansy 2009, ‘Saving for saving’s sake’, Smart Business South Florida, Viewed on 03 of
May 2011.

Atrill, P 2006, Financial Management for Decision Making, 4th edition, Prentice Hall, United
Kingdom.

Brassington, F & Pettitt, S 2000, Principles Of Marketing, Second Edition, Prentice Hall, UK.

Cocheo,S 2002, ‘ING shticks to its net- ING’, ABA Banking journal, Vol.94 Issue 8, p7.

David Breen, (29th,September 2009) www.ingdirect.com.au,

http://www.ingdirect.com.au/assets/pdf/Orange_Everyday_290909.pdf, 08-05-2011

Kirsner, S 2003, ‘Would You like a Mortgage with your Mocha?’, Fast Company, Issue 68, p110-
114.

Kiviat, B 2007, ‘How a man on a mission (And a Harley) Reinvented banking’, TIME, Vol.169, p44-
46.

Kotler, P, Brown, L, Burton, S, Deans, K & Armstrong, G 2010, Marketing, Pearson, Australia.

Kotler, P & Armstrong, G 2001, Principles Of Marketing, Prentice Hall, USA.

McGeer, B 2010, ‘Give them something to talk about’, U.S. Banker, Viewed on 03 of May 2011.

O, Ferrell, Michael, D, Hartline, George, H & Lucas 2002, Marketing Strategy, 2 nd edition, Harcourt,
USA.

Thomas M. Anderson, 2007, ‘Online banks Branch out’, Kiplinger’s Personal Finance.

Sanders, L 2004, ‘ING cafe: Coffee, tea or mortgage?’, Advertising Age, Vol.75 Issue 24, p8.

Sullivan, O 2003, ‘“Tough-love” bank thrives’, ABA Banking Journal. Viewed on 04 of May 2011.

Wappling, A, Strugnell, C & Farley, H 2010, ‘ Product bundling strategies in Swedish markets: links
to business orientation and perceived effects on consumer influence’, International Journal of
Consumer Studies.

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