1. Customer Segmentation in the Banking Industry Dr. Robert L. Underwood Associate Professor Department of Business & Accounting Furman University July 26, 2016

2. Course Outline 2 Overview: This lecture/discussion provides a comprehensive overview of the fundamentals of market segmentation; including, an in-depth class case experience evaluating the strategic segmentation efforts of the banks represented in the CBA Executive Banking School. Curriculum Sequence: This presentation follows the Initial Plan Presentation and precedes our discussion of Marketing Functional decisions. Course Objectives: 1.Enhance understanding of the fundamentals of market segmentation 2.Enhance students’ ability to assess the segmentation strategy of their current institution in order to strengthen their understanding of bank positioning 3.Provide a clear understanding of the relationship between effective segmentation strategy and the balanced scorecard in the simulation Teaching Format: Lecture and class discussion Advance Preparation: None required.

3. Welcome to Executive Banking School Basic Analysis, Planning & Forecasts Customers, Segments, Advertising & Communication Product Pricing & Development Delivery Channel Optimization Coming Full Circle Customer Centric Decisions Expense Management Tying it all to your bank Intersession Assignment 3

4. Overview of Customer Segmentation in the Banking Industry 4 Fundamentals of segmentation In class case analysis addressing effective market segmentation in the banking industry

5. What is Segmentation? ►“The subdividing of a market into distinct subsets of customers, where any subset may conceivably be selected as a target market to be reached with a distinct marketing mix” Philip Kotler, Northwestern University

6. Why Segment? Enables the firm to design a strategic marketing plan that more precisely meets the needs of the customer in a specific market segment Enhances a firm’s focus, competitiveness, communication, retention and profitability. 6

7. Typical Segmentation Variables for Consumer Markets

8. Requirements for Effective Segmentation To be useful, market segments must be: Measurable Accessible Substantial DifferentiableActionable

9. Luxury Lifestyle Collection Signature Select Service Extended Stay Destination Ritz Carlton; Bvlgari; J.W. Marriott Edition; Autograph Collection; Renaissance; AC Hotels; Moxy Hotels Marriott; Delta Hotels & Resorts Courtyard; Springhill Suites; Fairfield Inn & Suites; Protea Hotels Extended Stay: Residence Inn; TownePlace Suites; Marriott Executive Apartments Destination: Gaylord Hotels Effective Segmentation - Marriott

10. Classification of Four General Targeting Characteristics

11. Class Case: Evaluate your Current Bank Segmentation Strategy Reflecting on your current bank, address the following questions: 1. How clearly defined and delineated are your bank’s customer segments? On what variables are the bank’s customers generally segmented (e.g., demographically, behaviorally)? What are the major segments? 2. Do you believe your bank is consciously evaluating data/trends to identify existing and/or growing segments? Is the bank missing out on some segment opportunities? Is there a solid understanding of the differing behaviors, needs & desires of these segments by bank management? 11

12. Evaluate your Current Bank Segmentation Strategy 3. How relevant is the growing millennial population to your bank’s customer base? Is there a significant variance in the bank’s customer base in terms of consumer digital banking usage at this time? Is your bank effectively adapting their market offering to deliver value to both heavy and light digital banking segments? 4. How do the changing demographics and behavioral trends (e.g., increased digital banking) mesh with your bank’s core strategy? Is there a significant need to reevaluate the bank’s core strategy? Let’s Discuss! 12

13. Marketing Functional Decisions Apply this newfound understanding of segmentation to Marketing functional decisions. 13

14. Please fill out your course evaluations. We value your feedback! https://www.surveymonkey.com/r/L2DDG8C Evaluations 14