Swinburne Library http://www.swinburne.edu.au/lib Author: Malhotra, Naresh K. Chapter Title: Bank of America : leading the American way Book title: Basic marketing research : integration of social media Edition: 4th ed. Place published: Upper Saddle River, N.J. Publisher: Harlow : Pearson Year: 2012 Pages: 613-617 These details can be used to create a citation. Check with your department or school to see which style is required. Harvard style guide: http://www.swinburne.edu.au/lib/studyhelp/harvard_style.html Powered by TCPDF (www.tcpdf.org) Swinburne University of Technology | CRICOS Provider 00111D | swinburne.edu.auCOMPREHENSIVE CASES WITH REAL DATA CASE 3.1 BANK OF AMERICA Leading the American Way Bank of America, headquartered in Charlotte, North Carolina, is the largest bank holding company in the United States, by assets, and the second largest bank by market capitalization. BankAmerica began as the American Bank of Italy, which was founded in 1904 by Amadeo Giannini, and Bank of America still operates under Federal Charter 13044, which was granted to Giannini on March 1, 1927. The bank . has its roots in two former banks: NationsBank and the San Francisco-based BankAmerica. The two merged in 1998 and assumed the name Bank of America. At the time, the merger was the largest bank acquisition in history. Bank of America acquired Countrywide Financial in 2008, giving the bank a substantial market share of the mortgage business. Bank of America acquired Merrill Lynch & Co. in 2009. This acquisition made Bank of America the largest financial services company in the world. Bank of America caters its services to individual consumers, small and midsize businesses, and large corporations with a full range of banking, investment, asset management, and other financial products and services. As of 2011, Bank of America serves clients in more than 150 countries and has relationships with 99 percent of the U.S. Fortune 500 companies and 83 percent of the Fortune Global 500 companies. This publicly traded corporation provides a diversified range of financial and risk-management products and services both domestically and internationally through four market segments: Global Consumer & Small Business Banking, Global Corporate & Investment Banking, Global Wealth & Investment Management, and International. Global Consumer and Small Business Banking Global Consumer and Small Business Banking (GC&SBB) is the largest division in the company; it deals primarily with consumer banking and credit card issuance. The acquisition of FleetBoston and MBNA significantly expanded its size and range of services, generating about 50 percent of the company's total revenue in 2007. It competes directly with the retail banking divisions of Citigroup and JPMorgan Chase. As of 2011, the GC&SBB organization includes more than 6,100 retail branches and more than 18,700 ATMs across the United States. Global Corporate and Investment Banking The bank's investment banking activities operate under the Merrill Lynch subsidiary and provide mergers and acquisitions advisory, underwriting, capital markets, as well as sales and trading in fixed income and equities markets. Its strongest groups include Leveraged Finance, Syndicated Loans, and Mortgage Backed Securities. It has one of the largest research teams on Wall Street. Global Wealth and Investment Management Global Wealth and Investment Management (GWIM) manages assets of institutions and individuals. It is among the 10 largest U.S. wealth managers (ranked by private banking assets under management in accounts of $1 million or more as of June 30, 201 0). GWIM has five primary lines of business: Premier Banking & Investments (including §]~ SPSS Data File Excel Data File Bane of America Investment Services, Inc.), The Private Bank, Family Wealth Advisors, Columbia Management Group, and Bane of America Specialist. Bank of America has recently spent $675 million building its U.S. investment banking business and is looking to become one of the top five investment banks worldwide. Bank of America already has excellent relationships with the corporate and financial institutions world. These relationships, as well as a balance sheet that most banks would kill for, are the foundations for a lofty ambition. International Operations Bank of America's Global Corporate and Investment Banking spans the globe with divisions in the United States, Europe, and Asia. The U.S. headquarters are located in New York, European headquarters are based in London, UK and Asia's headquarters are based in Hong Kong. Bank of America generates 90 percent of its revenues in its domestic market and continues to buy businesses in the United States. The core of Bank of America's strategy is to be the number one bank in its domestic market. It has achieved this through key acquisitions. As a result of its mergers and acquisitions, Bank of America is now the largest issuer of credit, debit, and prepaid cards in the world based on total purchase volume, as well as the largest consumer and small business bank in the United States. Competition On a national and international level, Bank of America's main competition consists of Citigroup, Wells Fargo, and JPMorgan Chase & Company. However, Bank of America also encounters fierce competition from regional and local banks all over the country. Marketing Issue and Marketing Research With Bank of America representing so many customers, it needed to provide a wider range of services to meet their needs. Bank of America's Innovation and Development Team (I&D Team) realized that the customers wanted different things when it came to banking other than the "traditionally designed bank branch." Therefore, Bank of America conducted a study to understand its consumers, their lifestyles, and potential for customer segmentation in terms of investment products and service needs. The questionnaire used follows and the data file is provided on the Web site for this book. The outputs and the analyses of this study should help Bank of America carve its growth plan and its successful implementation. Questions Chapter 1 1. Discuss the role that marketing research can play in helping Bank of America formulate sound marketing strategies. Chapter 2 2. Management would like to further expand Bank of America's market share in the consumer market. Define the managementdecision problem. 613614 CASE 3.1 BANK OF AMERICA 3. Define an appropriate marketing research problem based on the management-decision problem you have identified. Chapter 3 4. Formulate an appropriate research design for investigating the marketing research problem that you have defined in Chapter 2. Chapter4 5. Use the Internet to determine the market shares of the major banks for the last calendar year. Chapter 5 6. What type of syndicated data will be useful to Bank of America? Chapter 6 7. Discuss the role of focus groups versus depth interviews in helping Bank of America expand its market share. Chapter 7 8. If a survey is to be conducted to determine consumer preferences for banks, which survey method should be used and why? ChapterS 9. Discuss the role of preexperimental versus true experimental designs in helping Bank of America expand its product offerings. Chapter 9 10. Illustrate the use of paired comparison and constant sum scales in measuring consumer preferences for banks. Should any of these scales be used? Chapter 10 11. Develop a multi-item scale for measuring attitudes toward Bank of America. Chapter 11 12. Critically evaluate the questionnaire developed for the Bank of America survey. Chapter 12 13. What sampling plan should be adopted for the survey of Chapter 7? Chapter 13 14. How should the sample size be determined? Chapter 14 15. How would you supervise and evaluate field workers for conducting the survey of Chapter 7? Chapter 15 16. Many of the importance items have more than 10 percent of the values missing. Identify these items. How would you address these missing values? 17. Recode the following demographic characteristics into thecategories specified: a. Age (Q9): 27-57 = 1, 58-68 = 2, 69-75 = 3, 76-90 = 4 b. Marital status (Q11 ): now married= 1, all other, i.e., now not married= 2 c. Number of dependent children (Q12): 3-10 = 3 d. Education (Q14): Combine some high school, high school graduate, and vocational or technical school into a single category, and also combine law school graduate, dental/medical school graduate, and doctorate into a single category. 18. Recode the advantage of using primary provider (Q5) into two categories: 1-3 = 1 (small advantage) and 4-5 = 2 (big advantage). 19. Recode overall satisfaction with service provider (Q6_a) into three categories: 2-4 = 1, 5 = 2, 6 = 3. Chapter 16 20. Calculate an overall rating score for the primary financial provider by summing the ratings of all the 13 items in Q6 (Q6_a through Q6_m). Obtain a frequency distribution and summary statistics. Interpret the results. 21. Are the decision-making approaches (Q8) related to any of the demographic characteristics (Q9 through Q15, as recoded in Chapter 15)? 22. Is the recoded advantage of using primary provider (recoded Q5) related to any of the recoded demographic characteristics? Chapter 17 23. Is the recoded advantage of using primary provider (recoded Q5) related to any of the importance variables (Q1_a through Q1_1)? 24. Is the recoded advantage of using primary provider (receded Q5) related to any of the ratings of the primary financial provider (Q6_a through Q6_m)? 25. Is "the performance of investments with this provider" (Q1_a) more important than "online services offered" (Q1_e)? Formulate the null and alternative hypotheses and conduct an appropriate test. 26. Is the likelihood of "recommend your primary provider to someone you know" (Q2) lower than the likelihood of "continue to use your primary provider at least at the same level as up to now" (Q3)? Formulate the null and alternative hypotheses and conduct an appropriate test. 27. Can the decision-making approaches (Q8) explain any of the importance variables (Q1_a through Q1_1)? 28. Is there a relationship between the importance variables considered individually (Q1_a through Q1_1) and the recoded demographic characteristics (Q9 through Q15)? Chapter 18 29. Can the likelihood of "recommend your primary provider to someone you know" (Q2) be explained by the ratings of the primary financial provider (Q6_a through Q6_m) when these ratings are considered simultaneously? 30. Can the likelihood of "continue to use your primary provider at least at the same level as up to now" (Q3) be explained by the ratings of the primary financial provider (Q6_a through Q6_m) when these ratings are considered simultaneously? Chapter 19 31. Write a report for Bank of America based on all the analyses that you have conducted. What do you recommend Bank of America do in order to continue to grow?References 1. www.bankofamerica.com, accessed February 3, 2011. 2. http://en.wi kipedia .org/wiki!Bank_of_America, accessed January 4, 2011. 3. Associated Press, "Bank of America to Acquire Countrywide Deal for Country's Largest Mortgage Lender Valued at $4.1 Billion" CASE 3.1 BANK OF AMERICA 615 (January 11, 2008), www.msnbc.msn.com/id/22606833, accessed May 19, 2008. 4. S. Thomke, "How Bank of America Turned Branches into Service-Development Laboratories," http://hbswk.hbs.edu/ item/3459.html, accessed May 31,2007. Note: This case was prepared for class discussion purposes only and does not represent the views of Bank of America or its affiliates. The problem scenario is hypothetical and the name of the actual company has been disguised. However, the data provided are real and were collected in an actual survey by a prominent marketing research firm, whose name is also disguised. Some questions have been deleted, while the data for other questions are not provided because of proprietary reasons. ANNUAL FINANCIAL SERVICES SURVEY Introduction T~is survey asks some questions about financial services, i.e., about investments and banking. The primary financial services provider (company) is where you have the largest portion of your household's investments and savings/checking assets. Your cooperation in answering these questions is greatly appreciated. Part A. Financial Services Provider 1. If you were selecting a primary financial provider (company) today, how important would each of the following be to you? (X ONE box for EACH.) Not Extremely Very Somewhat Somewhat Important Important a. Performance of investments with this provider 50 b. Fees or commissions charged ........................ 50 c. Depth of products and services to meet the range of your investment needs ..................... 50 d. Ability to resolve problems ............................ 50 e. Online services offered .................................. 50 f. Multiple providers' products to choose from 50 g. Quality of advice ........................................... 50 h. Knowledge of representatives or advisors you deal with ....................................................... 50 i. Representative knowing your overall situation and needs ..................................................... 50 j. Access to other professional resources ........... 50 k. Degree to which my provider knows me ........ 50 I. Quality of service ........................................... 50 2. How likely are you to recommend your primary provider to someone you know? (X ONE box.) 3. How likely is it that you will continue to use your primary provider at least at the same level as up to now? (X ONE box.) ......... 4. How likely is it that you or your household will drop or replace your primary provider? (X ONE box.) 5. How would you rate the advantage to you of using your primary provider rather than other financial services providers? (X ONE box.) Important 40 40 40 40 40 40 40 40 40 40 40 40 Extremely Likely 50 50 50 Very Big 50 Important Unimportant at All 30 20 10 30 20 10 30 20 10 30 20 10 30 20 10 30 20 10 30 20 10 30 20 10 30 20 1 0 30 20 10 30 20 1 0 30 20 10 Very Somewhat Somewhat Very Likely Likely Unlikely Unlikely 40 30 20 10 40 30 20 10 40 30 20 10 Big Some Slight None 40 30 20 10616 CASE 3.1 BANK OF AMERICA 6. How would you rate the following elements of your primary financial provider (company)? If it is not applicable, select "NA." (X ONE box for EACH statement.) Excellent Very Good Good Fair Poor NA a. Overall satisfaction with primary provider 60 50 40 30 20 10 b. Performance of investments with this provider 60 50 40 30 20 10 c. Fees or commissions charged 60 50 40 30 20 10 d. Depth of products and services to meet the range of your investments needs 60 50 40 30 20 10 e. Ability to resolve problems 60 50 40 30 20 10 f. Online services offered 60 50 40 30 20 10 g. Multiple providers' products to choose from 60 50 40 30 20 10 h. Quality of advice 60 50 40 30 20 10 i. Knowledge of representatives or advisors you deal with 60 50 40 30 20 10 j. Representative knowing your overall situation and needs 60 50 40 30 20 10 k. Access to other professional resources 60 50 40 30 20 10 I. Degree to which my provider knows me 60 50 40 30 20 10 m. Quality of service 60 50 40 30 20 10 7. During the past 12 months, have you or anyone in your household switched some assets (other than checking account assets) from one investmenVsavings provider to another? (Do NOT include switching money from one individual investment such as a stock or bond to another stock or bond within the same brokerage or investment company.) Please exclude assets in a 401 (k), 403(b), 457 or similar defined contribution retirement accounts. 1 DYes 2 DNo 8. The following are some different approaches you and/or your household might take regarding advice and investment decision-making. Please read each one and then answer the question below. 1. Using a variety of online or offline information sources, you make your own investment decisions without the assistance of an investment professional or advisor. 2. Using a variety of online or offline information sources, you make most of your own investment decisions but use an investment professional or advisor for specialized needs only (e.g., alternative investments or tax advice). 3. You regularly consult with an investment professional or advisor and you may also get additional information yourself, but~ make most of the final decisions. 4. You rely upon an investment professional or advisor to make most or Q)l your investment decisions. For the majority of your assets, which ONE of the above (1-4) BEST describes your preferred approach? (Write in a number from 1-4.) Number: ____ Part B. Demographic Characteristics Your answers to the following questions will be used to help us interpret the information you have provided. 9. What is your age? Age: years 10. Are you ... ? 1 DMale 2 D Female 11. What is your current marital status? (X ONE box.) 1D Now married 3 D Divorced 5 D Single, never married 2 DWidowed 4 D Separated 6 D Living together, not married 12. How many people in your household are dependent children? (Write In) # ___CASE 3.1 BANK OF AMERICA 617 13. How many other dependents are you supporting (e.g., parents, grandparents)? (Write In) # ___ 14. For the following type of financial transaction, please indicate who is primarily responsible, or if the responsibilities are shared. (X ONE box for each.) Male Head of Household Female Head of Household Investment decision making .. ... .. ... ... .. ... .. .. .. ... .. .. .. .. .. .. 1 0 20 15. What is the highest level of education you have completed? (X ONE box.) 01 0 Some high school 02 0 High school graduate 03 0 Vocational or technical school/apprenticeship 04 0 Some college 05 0 College graduate 16. What is your retirement status? (X ONE box.) 06 0 Some graduate school 07 0 Master's degree 08 0 Law school graduate 09 0 Dental/medical school graduate 10 0 Doctorate 1 0 Retired 2 0 Semi-Retired 3 0 Not Retired Shared Equally 30 Other 40