Copenhagen Business School IMM International Marketing Management BRAND MANAGEMENT PROCESS Design Brand Experiences to Maximize Shareholder Value Case: SAXO BANK Uriel Alvarado Cancino Frederik Güldner Kolenda Advisor: Richard Jones Secondary Advisor: Larry Light November 2007 Brand Management Process Master Thesis! 1 Acknowledgments During the process of this project we received and combined knowledge from various sources. We would like to thank all of those involved in the creation of this project. Our thanks go to our advisors Richard Jones and Larry Light who not only helped us formulating the concepts, but encouraged and assisted us with information and support throughout the writing of the project. Larry Light was not only an active professor but also opened the doors to his network from where we received first hand knowledge. We would like to thank David Aaker of Berkley University for his energy and comments on our research topic. Our knowledge and the paper have also benefited from management experts, such as Antonio J. Lucio, Senior Vice President at PepsiCo Int.; Margo Georgiadis, Executive Vice President and Chief Marketing Officer of Discover Financial Services LLC; Jeff Dunn former President at Coca-Cola- North America and Jim Lecinski Director of Google in Central Region. We would also like to thank Saxo Bank for their contribution with great insights, time, resources and effort. We were in contact with different Saxo Bank managers through the development of the pro- ject. We owe special thanks to Rabbe Ekholm, Chief Commercial Officer; Kasper Grønnegard, Mar- keting Director; Birgitt Juel Christensen, Head of Corporate Brand; Ulrik Branner, Director Global Business Development and Morten Skov, HR manager. We would finally like to thank Hello Group and Kontrapunkt for taking the time to guide us with ex- cellent advice and insights into their work, which certainly added value to our project. The present thesis was defended on Monday the 26th of November 2007 at Solbjerg Plads Copenhagen Business School. The examiners representing the Copenhagen Business School were: Internal/Advisor: Richard Jones External: Søren Lommer Grade old scale: 13 Grade new scale: 12 Brand Management Process Master Thesis! 2 Executive Summary This thesis centers on the management of brands. Particularly the phenomenon is examined through studies from the financial service industry and the case study of Saxo Bank A/S. The findings reveal that in order to satisfy today’s demanding customers, offerings should be thought of as experiences, and created through internal processes with the aim of being innovative. The challenges are to suc- cessfully develop, align and coordinate the internal processes, while at the same time incorporating consumer insights in terms of wants and needs. In order to differentiate the brand, innovation needs to be founded not only on the tangible features and functions of the experience but just as much on the intangibles, such as the emotional rewards, the values and the personality of the brand. At the outset, the study seeks to explore the trends, motives and drivers of the brand management within the financial service industry. Consequently this thesis materialized from an initial explorative research supported by theory and the case study of Saxo Bank. Brand management in the financial service industry is today essential to survive in an increasing competitive marketplace. Accurate consumer insights along with effective internal management of resources are vital elements and the underlying premises of this thesis in order to reap the benefits of a differentiated and relevant strong brand. Consequently, the problem area of research in this study centers on the implications of the changes in today’s economy, to the management of brands in the Financial Service Industry. Thus, this study is a theoretical and empirical examination of 1) “How should companies in the Financial Service Indus- try create brand experiences with the goal of maximizing shareholder value?” and 2) “How can the stages of the brand management process be applied to a case?” In the case study analysis, it is found that the developed brand management process applies well to Saxo Bank. However as the focus on brand management has been almost non-existing, the company needs to improve within many areas as outlined in the case conclusion. Conversely Saxo Bank has through its remarkably strong corporate culture, established a solid foundation to leverage the brand in the future. Brand Management Process Master Thesis! 3 TABLE OF CONTENTS 1. Introduction! 6 1.1 Problem Statement! 7 1.2 Research Motivation! 8 1.3 Central Definitions! 9 1.4 Structure of the thesis! 10 2. Methodology! 12 2.1 Theories and Literature Choice! 15 2.2 Case Study Design! 16 2.3 Data Gathering! 17 2.4 Empirical Research! 18 2.5 Validity and Reliability! 22 2.6 Limitations of the Thesis! 25 3. Evolution and Trends of the Financial Service Industry and Brand Manag"# ment! 27 3.1 History of brokers and the stock exchange! 27 3.2 Evolution and Trends of Brand Management! 30 3.3 Chapter Three Conclusion! 37 4. Brands as Resource Management # Theoretical Framework! 38 4.1 Theoretical Foundation! 38 4.2 Research Questions and Propositions! 42 4.3 Brand Management from Resources to Meanings! 44 4.4 Brands as innovative resource bundles! 50 4.5 Brand Management from Resources to Meanings through a Process! 55 5. Brand Management Process applied to Saxo Bank! 63 5.1 Applying the brand management process! 63 5.2 History of Saxo Bank! 64 5.3 Saxo Offerings, Touch-points and Experiences! 64 Brand Management Process Master Thesis! 4 5.4 Stage 1: Brand Analysis Theoretical! 69 5.5 Stage 1: Analysis of Saxo Bank! 76 5.6 Stage 2: Brand Vision - Theoretical! 83 5.7 Stage 2: Saxo Bank"s Brand Vision! 90 5.8 Stage 3: The Design of Experiences - Theoretical! 93 5.9 Stage 3: Saxo Bank"s Brand Experience Design! 102 5.10 Stage 4: Operationalization - Theoretical! 108 5.11 Stage 4: Saxo Bank"s Brand Operationalization! 113 5.12 Stage 5: Brand Evaluation and Renovation - Theoretical! 118 5.13 Stage 5: Saxo Bank"s Brand Renovation! 120 6. Conclusion! 123 6.2 Theoretical Implications! 128 6.3 Managerial Implications! 129 6.4 Methodological Implications! 131 Bibliography! 133 Brand Management Process Master Thesis! 5 1. Introduction The pace at which the world is changing is accelerating every day. As a consequence we as humans and organizations need to adapt increasingly faster and the ability to response to the changes be- comes imperative for success in this new millennium. Jack Welch former Chairman of General Elec- tric expresses this: “When the rate of change inside the company is exceeded by the rate of change outside the company, the end is near.” During the nineties and the first seven years of the new millennium, the emergence and evolution of the Internet and other technological advances have transformed the world. Today individuals have the ability to collaborate, compete and consume globally in a more dynamic, transparent and liberal way. Technology is a key factor contributing to this change, as it is through technical means that in- dividuals and organizations can communicate faster, cheaper, having a global reach and being able to access and exchange more knowledge simply through the use of a PC. These technological advances have had an effect on the way companies compete and collaborate to satisfy consumer demands, leading in many cases to product commoditization. The Internet has been the greatest force of this commoditization; its capability for friction-free transactions enables instant price comparisons across many offerings, physically located in different geographic regions; while its ability to rapidly execute these transactions allow customers to benefit from time and cost savings. Consequently organizations have been forced to adapt to the developments in the environment and to the changes in consumer demands. The financial service industry has been significantly affected by these changes and like many other industries, found their products and services commoditized (Kevin J Clancy, 2001). Until recently, the companies within this industry, have been protected by little transparency making it difficult for customers to compare offerings and hence easy for companies to overcharge their offerings. How- ever, the emergence of the Internet increased transparency and enabled customers to easily compare Brand Management Process Master Thesis! 6 price and offerings. With no discernible differences among brands, consumers select financial serv- ices products based on price instead of product features or advertising. Consequently without a dif- ferentiating brand companies will find themselves stuck in a low-price rut trying to out cheap their competitors in order to maintain their market share1. This paper will discuss the implications of the changes in the economy throughout the last decade and their impact on the financial service industry. Grounded in the field of brand management it will propose the necessary adaptations to models and frameworks to answer following problem state- ment. 1.1 Problem Statement “What are the major implications of the changes in the context of today’s economy, to the management of brands in the Financial Service Industry?” In order to answer this we set out with an exploratory research that serves to identify these implica- tions and key elements, for further investigation. The exploratory research unveils the interrelation- ship of these implications and elements and resolve in a set of research questions which allow for further examination. Research question 1: “How should companies in the Financial Service Industry create brand experiences with the goal of maximizing shareholder value?” This research question serves to identify the important elements of brand experiences. Moreover it aims at explaining the relationships between these elements and their connection to the field of brand management. Based on this it seeks to propose a brand management process, that can be used within the industry.