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Case  Study:  RBC  &  BMO  Merger    

     MKTG  2202  Set  2E                                                                 Geoffrey  Bird                                                                 February  20,  2011  

  E t e r n u s   A u r u m :   C u r t i s   C l a r k ,   L i s a   D e b i ,   M a r i s a   F o r s y t h e ,     A m y   M a c D o n a l d ,   C a s s a n d r a   M u r p h y ,   J o n a t h a n   S a l d a n h a     C o n t a c t :   M a r i s a   F o r s y t h e   m a r i s a f o r s y t h e @ g m a i l . c o m  


Table  of  Contents   Introduction  ...............................................................................................................................................  4   Problem  ......................................................................................................................................................  4   Key  Findings  ...............................................................................................................................................  5   ĂŶĂĚĂ͛ƐĂŶŬŝŶŐ^LJƐƚĞŵ  .............................................................................................................................  5   The  Positioning  of  Major  Canadian  Banks  ....................................................................................................  5   CIBC  ...........................................................................................................................................................  5   Toronto  Dominion  (TD)  .............................................................................................................................  5   Scotiabank  .................................................................................................................................................  5   Canadian  Values  (Appendix  A  ʹ  Fig.  2)  .....................................................................................................  6   Trends  in  Canadian  Banking  (Euromonitor,  2009)  ....................................................................................  6  

SWOT  Analysis  ...........................................................................................................................................  6   Strengths  .......................................................................................................................................................  6   Largest  Market  Share  of  Canadian  Financial  Services  Industry  ................................................................  6   Accessibility  &  Efficiency  Using  Technological  Advances  ..........................................................................  6   Stability  and  Brand  Loyalty  .......................................................................................................................  6   Weaknesses  ..................................................................................................................................................  7   Quality  and  Quantity  .................................................................................................................................  7   Bank  Closures  and  Unforeseen  Costs
  ......................................................................................................  7   Opportunities  ................................................................................................................................................  7   Baby  Boomers  to  Increase  Mandates  for  Retirement  Services  .................................................................  7   Improving  Economic  Prospects  in  North  America  .....................................................................................  7   Threats  ..........................................................................................................................................................  7   Increase  in  Local  Competition  ...................................................................................................................  7   Consumer  Concerns  ...................................................................................................................................  7   Increase  in  global  competition  and  foreign  competitors  in  Canada  .........................................................  8  

Competitive  Analysis  ...........................................................................................................................  8   Target  Market  .........................................................................................................................................  9   Demographic  .................................................................................................................................................  9   Geographic  ....................................................................................................................................................  9   Psychographic  .............................................................................................................................................  10   Buying  behaviour  ........................................................................................................................................  10  

Alternative  1:  The  Leading  Bank  of  Canada  (LBC)  ...................................................................  11   Positioning  Statement:  ............................................................................................................................  11   Creative  Strategy  .....................................................................................................................................  11  

Alternative  2:  United  Bank  of  Canada  ..........................................................................................  12   Positioning  Statement:  ............................................................................................................................  12   Creative  Strategy:....................................................................................................................................  12   2  |  P a g e    


Alternative  3:  Emerge  Financial.....................................................................................................  13   Positioning  Statement:  ............................................................................................................................  13   Creative  Strategy  .....................................................................................................................................  13  

Solution  ...................................................................................................................................................  14   Plan  of  Action  ........................................................................................................................................  15   Course  Concepts  ..................................................................................................................................  16   Work  Cited  .............................................................................................................................................  17   Appendix  A  ............................................................................................................................................  19   Appendix  B  ............................................................................................................................................  28    

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Introduction   Canadian  banks  have  long  been  perceived  as  strong,  trusted  institutions.    ĂŶĂĚĂ͛ƐďĂŶŬŝŶŐƐLJƐƚĞŵ was  ranked  one  of  the  most  stable  in  the  world  by  1998  (Mackenzie,  2000).    In  1998,  two  large   Canadian  banks,  the  Royal  Bank  of  Canada  (RBC)  and  the  Bank  of  Montreal  (BMO),  strategized  a   ĚƌĂŵĂƚŝĐƌŝƐĞĂďŽǀĞƚŚĞƐƚƌŽŶŐĐŽŵƉĞƚŝƚŝŽŶďLJŶĞŐŽƚŝĂƚŝŶŐǁŚĂƚǁŽƵůĚŚĂǀĞďĞĐŽŵĞ͞ƚŚĞďŝŐŐĞƐƚ merger  ŝŶĂŶĂĚŝĂŶŚŝƐƚŽƌLJ͟;DĂĐ<ĞŶnjŝĞ͕ϮϬϬϬͿǁŝƚŚƚŚĞƚǁŽĐƵƌƌĞŶƚK͛ƐƐŚĂƌŝŶŐůĞĂĚĞƌƐŚŝƉŽĨĂ new  bank.    At  the  time,  this  idea  was  not  well  received  by  the  Canadian  public  and,  despite  running   ƉƌŝŶƚĂĚƐǁŝƚŚƚŚĞƉŽƐŝƚŝŽŶŝŶŐƐƚĂƚĞŵĞŶƚ͞dǁŽďĂŶŬƐ͘KŶĞƉůĞĚŐĞ͟(MacKenzie,  2000)  to  convince   Canadians  of  the  benefits  of  a  merger,  the  plan  ultimately  failed  to  occur.       ƵƌƌĞŶƚůLJ͕ZŝƐĂŶĂĚĂ͛ƐůĂƌŐĞƐƚďĂŶŬĂŶĚŝƐĞdžƉĂŶĚŝŶŐŽǀĞƌƐĞĂƐǁŝƚŚƌŽƵŐŚůLJϳϬ͕ϬϬϬĞŵƉůŽLJĞĞƐ ĂŶĚ͞ϭϰŵŝůůŝŽŶĐůŝĞŶƚƐŝŶϯϰĐŽƵŶƚƌŝĞƐ͟;,  2011).    dŚĞďĂŶŬ͛ƐƚŽƚĂůĂƐƐĞƚƐƌĂŶŬƚŚĞŵĂƐϯϴƚŚ largest  bank  in  the  world  with  assets  totaling  $608  billion  (Keeler,  2010)  and  RBC  is  one  of  two   Canadian  banks  to  make  the  top  50.   tŚŝůĞZǁĂƐƉŽƐŝƚŝŽŶĞĚĂƐ͞ƚŚĞƵůƚŝŵĂƚĞ͕ƉĂƚĞƌŶĂůŝƐƚŝĐďĂŶŬŝŶŐŝŶƐƚŝƚƵƚŝŽŶ͟;MacKenzie,  2000),  it   ƐƵƌƉƌŝƐŝŶŐůLJƉůĂŶŶĞĚƚŽŵĞƌŐĞǁŝƚŚ͞ƚŚĞƉĞŽƉůĞ͛ƐďĂŶŬĞƌ͟;DĂĐ<ĞŶnjŝĞ͕ϮϬϬϬͿ͕DK͘  Currently,  BMO   has  37,947  employees  and  assets  totaling  $360.62  billion,  (Forbes,  2010)  making  it  a  large  Canadian   bank,  but  significantly  smaller  than  RBC.   The  combined  bank  would  be  a  powerful  institution  on  the  national  and  world-­‐stage  with  combined   assets  of  $968.67  billion,  making  it  the  28th  largest  bank  in  the  world.    This  has  the  potential  of   ĚƌĂƐƚŝĐĂůůLJŝŶĐƌĞĂƐŝŶŐƚŚĞďĂŶŬ͛ƐŝŶĨůƵĞŶĐĞ͕ĂǁĂƌĞŶĞƐƐĂnd  profitability.    Last  year  the  combined   profits  of  the  two  banks  totaled  $  5.24  billion  (Forbes,  2010).       It  is  without  question  that  this  combined  bank  will  be  a  powerful  influence  in  the  Canadian  banking   system.  The  merger  will  also  pose  risks  to  the  already  established  companies  as  Canadian   consumers  are  very  loyal  to  their  banks  (MacKenzie,  2000)  ʹ  the  merged  bank  will  risk  losing  the   trust  of  Canadians  and  thus  clientele.      

Problem   The  problem  that  the  Bank  of  Montreal  and  the  Royal  Bank  of  Canada  face  when  merging  is:   Which  brand  positioning  strategy  will  allow  the  merged  bank  to  position  itself  as  a  strong  Canadian   financial  institution  both  nationally  and  internationally,  without  alienating  its  current  customer  base   and  having  the  most  positive  brand  awareness  of  any  Canadian  bank  as  measured  by  a  survey  one   year  after  the  merge?  

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Key  Findings   ĂŶĂĚĂ͛ƐĂŶŬŝŶŐ^LJƐƚĞŵ   Ranked  first  among  global  financial  institutions  by  the  World  Economic  Forum  for  the  robustness  of   ŝƚƐďĂŶŬŝŶŐƐLJƐƚĞŵ͕ĂŶĂĚĂ͛Ɛ  banking  system  is  very  stable  (Datamonitor,  2010).  After  the  economic   ĚŽǁŶƚƵƌŶŝŶϮϬϬϴ͕ĂŶĂĚĂ͛ƐĞĐŽŶŽŵLJŚĂƐƐŝŐŶŝĨŝĐĂŶƚůLJŝŵƉƌŽǀĞĚ͘ƐƐĞĞŶŽŶƉƉĞŶĚŝdžʹ  Fig.  1  in   the  appendix,  Canadian  GDP  is  steadily  increasing.  Unemployment  in  Canada  increased  surrounding   conditions  in  2008  but  it  is  projected  to  decrease  in  the  next  few  years  as  Canada  regains  more   economic  strength.  The  2010  Index  of  Economic  Freedom  also  ranked  Canada  as  the  7th  freest   nation  in  the  world.  This  is  seen  as  a  positive  factor  for  future  economic  investment,  especially  from   foreigners  wanting  to  invest  in  Canada  (Datamonitor,  2010).  

The  Positioning  of  Major  Canadian  Banks   CIBC   /͛ƐǁĞďƐŝƚĞŝƐƵƐĞƌĨƌŝĞŶĚůLJĂŶĚƐŝŵƉůĞƚŽƵƐĞ͘dŚĞƚŽƉŵĞŶƵďĂƌŝŶĐůƵĚĞƐŶŐůŝƐŚ͕  French  and   Chinese  as  language  options.  CIBC  focuses  its  images  on  the  theme  of  people  from  all  walks  of  life   (different  ages,  ethnicities,  families,  couples  and  singles).  The  bank  is  positioned  as  a  national  bank,   ĨƌŽŵĐŽĂƐƚƚŽĐŽĂƐƚ͘/ƚƐĐŽŵŵĞƌĐŝĂůƐĨĞĂƚƵƌĞ͞ƌĞĂů͟ĞŵƉůŽLJĞĞƐĂŶd  they  follow  a  quirky,  simple  and   informative  theme  (Newswire,  2010).     Positioning  statement:  ͞&ŽƌǁŚĂƚŵĂƚƚĞƌƐ͟   Toronto  Dominion  (TD)   d͛ƐǁĞďƐŝƚĞŝƐǀĞƌLJŝŶĨŽƌŵĂƚŝŽŶŚĞĂǀLJĂŶĚƉƌŽĨĞƐƐŝŽŶĂůŝŶĐŽŵƉĂƌŝƐŽŶƚŽ/͛ƐǁĞďƐŝƚĞ͘/Ŷ comparison  to  CIBC,  there  is  only  the  option  of  changing  the  language  from  English  to  French.  There   is  a  greater  focus  on  bigger  business  banking  than  on  everyday  banking.  As  well,  TD  has  a  huge   emphasis  on  global  operations.  TD  purchased  Commerce  Bank  in  the  United  States  and  now   opĞƌĂƚĞƐŝƚĂƐdĂŶŬ;ƵƐŝŶŐƚŚĞƐĂŵĞůŽŐŽͿ͘dŚĞLJĂƌĞĂĚǀĞƌƚŝƐĞĚĂƐ͞ŵĞƌŝĐĂ͛ƐŵŽƐƚĐŽŶǀĞŶŝĞŶƚ ďĂŶŬ͟ǁŚŝĐŚŝƐƐŝŵŝůĂƌƚŽƚŚĞŚĞĂǀLJƉƌŽŵŽƚŝŽŶƐĞĞŶŝŶĂŶĂĚĂĂĚǀĞƌƚŝƐŝŶŐŚŽǁdŝƐ͞ŽƉĞŶ ^ƵŶĚĂLJƐ͘͟   Positioning  statement:  "Banking  can  be  this  comfortable"   Scotiabank   Scotiabank  has  a  very  bright,  colourful,  and  user-­‐friendly  website.  It  positions  itself  along  side   personal  savings  benefits  and  customer  service.  The  website  also  offers  English,  French,  and   Chinese  as  language  options.  Scotiabank  has  people  oriented  values  and  features  younger,  happy   looking  families  on  its  website.     Positioning  statement:  ͞zŽƵΖƌĞƌŝĐŚĞƌƚŚĂŶLJŽƵƚŚŝŶŬΗ   All  three  banks  include  Corporate  Social  Responsibility  Reports  on  their  websites  outlining  their   initiatives.    

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Canadian  Values  (Appendix  A  ʹ  Fig.  2)   A  full  list  of  Canadian  values,  as  described  by  Sue  L.T.  McGregor  is  outlined  in  the  appendix.  The   three  most  relevant  to  banking  and  the  RBC/BMO  merger  are:     1.  Risk-­‐Management:  Canadians  want  security  and  safety  that  will  lead  towards  lower  risk  with   their  finances.   2.  Self-­‐Control:  Consumers  want  anchors  in  their  lives,  trustworthiness,  satisfaction,  relaxation  and   rewards  from  taking  control  of  their  lives.   3.  Altruism  and  Charity:  There  is  projected  growth  in  giving,  charity  and  community  work  by   consumers  and  businesses.  This  could  play  an  important  role  when  consumers  are  choosing  where   to  do  their  banking.  

Trends  in  Canadian  Banking  (Euromonitor,  2009)   x Canadians  do  not  like  paying  service  fees   x More  bank  transactions  are  happening  in  Canada  than  ever  before   x Canadians  are  paying  off  their  credit  cards  more  than  Americans   x Rewards  cards  are  popular,  especially  when  getting  points  for  travel   x By  2026,  one  in  five  Canadians  will  have  reached  age  65   x 80%  of  Canadians  plan  to  spend  some  of  their  retirement  savings  on  travel   Of  37  global  markets  surveyed  recently,  Canada  ranked  number  one  in  the  adoption  of  online   banking,  with  67.1%  of  Canadian  Internet  users  banking  online  in  April  2008.  

SWOT  Analysis  (refer  to  Appendix  A  ʹ  Figure  14)   Strengths   Largest  Market  Share  of  Canadian  Financial  Services  Industry   If  RBC  and  BMO  merge,  they  will  become  the  28th  largest  bank  in  the  world  and  will  have  968.67   billion  dollars  in  assets  (Forbes,  2010).  This  will  allow  the  merged  bank  to  become  a  player   internationally  while  leading  financial  services  in  Canada,  therefore  dominating  the  competition  at   home  and  in  some  countries  abroad.  (MacKenzie,  2000).     Accessibility  &  Efficiency  Using  Technological  Advances   With  over  14,000  automated  banking  machines  nationwide,  only  Japan  has  a  greater  per  capita   coverage  than  Canada  on  the  global  stage  (MacKenzie,  2000).  Over  4,000  of  these  automated   banking  machines  are  acquired  from  RBC  alone  (RBC  Canada,  2011).  Having  bank  machines,  along   with  online  and  telephone  banking  accessible  24  hours  per  day,  seven  days  a  week  offers   consumers  greater  accessibility  and  convenience  with  their  banking  needs.     Stability  and  Brand  Loyalty   ĂŶĂĚĂ͛ƐďĂŶŬŝŶŐƐLJƐƚĞŵǁĂƐĚĞĞŵĞĚŽŶĞŽĨƚŚĞŵŽƐƚƐƚĂďůĞŝŶƚŚĞǁŽƌůĚŝŶϭϵϵϴĐŽŵƉĂƌĞĚƚŽ some  of  their  competitors  worldwide,  and  has  quickly  become  one  of  the  most  regulated  industries   nationwide  (MacKenzie,  2000).  Consistent  brand  loyalty,  high  customer  and  quality  service,  has   played  a  key  role  in  the  individual  developments  of  RBC  and  BMO  prior  to  the  merge.     6  |  P a g e    


Weaknesses   Quality  and  Quantity   Just  because  the  merger  will  create  a  large  bank  with  many  locations,  does  not  mean  that  the   quality  of  customer  service  will  remain  stable.  Creating  a  merged  bank  will  cause  initial  setbacks  as   employees  grasp  the  new  positioning  of  the  bank  and  any  new  strategies  created  by  the  merge.  This   could  mean  that  customer  service  and  employee  confidence  could  decline  as  employees  try  to   figure  out  how  to  work  well  together  in  this  new  situation.   Bank  Closures  and  Unforeseen  Costs   DĞƌŐŝŶŐDKĂŶĚZƚŽŐĞƚŚĞƌǁŝůůďĞĐŽƐƚůLJ͘^ŵĂůůƚƌĂŶƐŝƚŝŽŶƐůŝŬĞĐŚĂŶŐŝŶŐĐƵƐƚŽŵĞƌ͛ƐĚĞďŝƚĐĂƌĚƐ and  credit  cards  to  the  proper  new  logo  and  name  will  take  a  significant  amount  of  time  and  could   result  in  unforeseen  costs.  On  a  larger  scale,  the  two  banks  will  have  to  close  some  branches  to   maintain  proper  distribution  of  branches  needed  in  an  area.  With  fewer  branches,  fewer  employees   will  be  needed,  so  jobs  will  be  lost.  These  costs  can  be  devastating  for  the  bank,  but  also  for  the   employee  and  their  well-­‐being.  

Opportunities   Baby  Boomers  to  Increase  Mandates  for  Retirement  Services   By  2026,  1  in  5  Canadians  will  have  reached  age  65,  triggering  new  opportunities  for  both   retirement  and  insurance  services  in  Canada  (Euromonitor,  2009).  The  increase  in  demand  for  these   services  in  Canada  would  have  a  positive  effect  on  Canadian  banking  services.  Older  Canadians  will   be  more  focused  on  savings  and  investing  their  assets  into  their  future  and  their  families.     Improving  Economic  Prospects  in  North  America   After  the  2008/2009  recession,  the  global  economy  is  in  recovery  mode.  As  a  result,  economic   conditions  have  improved  due  to  increased  consumer  spending,  lower  borrowing  costs  and   government  stimulus  projects  (Datamonitor,  2010).  Because  of  these  aspects,  financial  service   demands  are  expected  to  increase,  eventually  benefiting  the  merged  bank  in  the  future.    

Threats   Increase  in  Local  Competition   Competitors  might  propose  their  own  merge  and  potentially  grow  higher  amongst  Canadian   financial  institutes.  The  increased  competition  would  also  mean  greater  consumer  expectations  for   information,  choice,  convenience  as  well  as  financial  services,  lower  fees  and  interest  rates   (MacKenzie,  2000).  If  any  other  larger  mergers  were  to  occur,  this  would  re-­‐distribute  Canadian   assets  and  could  cause  concern  with  the  Bank  of  Canada.   Consumer  Concerns   Over  400,000  Canadians  were  polled  during  a  7  month  period  in  1998,  voicing  many  of  their   ĐŽŶĐĞƌŶƐŽĨ͞ďŝŐďĂŶŬƐ͟ŝŶĂŶĂĚĂ͘ĂŶĂĚŝĂŶƐĐůĂŝŵĞĚƚŚĂƚƚŚĞŵĞƌŐĞŽĨ  RBC  and  BMO  would   escalate  into  a  major  public  policy  debate  with  consumers  questioning  the  decision  of  the  merger.   This  could  result  in  a  decrease  in  brand  loyalty  and  a  market  share  loss  for  the  merged  bank.   (MacKenzie,  2000).   7  |  P a g e    


Increase  in  global  competition  and  foreign  competitors  in  Canada   Global  foreign  competitors,  such  as  ING  Direct,  strategized  various  marketing  tactics  on  how  to   capture  Canadian  consumers  when  they  first  entered  the  Canadian  market  in  1997.  The  increase  in   foreign  competitors  entering  the  Canadian  market  could  potentially  provide  a  serious  threat  to  the   merged  bank.  (MacKenzie,  2000).   Double-­‐Dip  Recession   In  June  of  2010,  the  G20  world  leaders  "recognize[d]  the  threat  of  a  double  dip  recession"  (Egan   and  Hodgson,  2010)  in  Canada.  This  could  significantly  affect  the  bank's  profits,  as  well  as  their   offered  services  as  they  strive  to  keep  clientele  and  profits  up  during  a  period  changing  interest   rates,  low  employment  and  of  weakened  investments.    

Competitive  Analysis   The  merged  company  of  the  highly  established  RBC  and  BMO  will  prove  to  show  not  only  incredible   strength,  but  also  some  weakness  on  the  competitive  stage  of  Canadian  banking.  The  overpowering   competitive  advantage  the  merged  bank  will  have  over  its  competitors  is  its  sheer  size.    RBC  alone   currently  has  assets  of  $608  billion,  more  than  any  other  existing  bank.  The  addition  of  BMO's   $360.62  billion  will  give  the  merged  bank  a  total  of  $968.62  billion  in  assets  ʹ  nearly  doubling  TD,   the  next  most  valuable  bank.  Referring  to  Appendix  A  ʹ  Fig.  3,  if  revenue  streams  and  profits  are  to   remain  the  same  between  both  banks,  a  merger  between  the  two  would  produce  an  incredible   upper-­‐hand  in  revenues  and  profitability  compared  to  any  of  the  existing  major  Canadian  banks.   Apart  from  its  superior  financial  worth  and  potential  for  gain,  the  merged  bank  will  dominate  the   number  of  branches  and  automated  teller  machines  across  Canada.  Referring  to  Appendix  A  ʹ  Fig  3,   RBC  and  BMO  together  will  own  a  total  of  2641  branches  and  approximately  6964  ATM's.  This   heavy  concentration  of  banks  will  serve  to  increase  customer  accessibility,  convenience,  and  trust   while  also  increasing  brand  awareness  of  the  bank.  The  employees  that  would  also  be  a  product  of   the  merger  would  serve  to  be  a  great  strength  of  human  capital  for  the  bank.  Referring  to  Appendix   A  ʹ  Fig.  3,  the  merged  bank  of  RBC  and  BMO  would  have  116,173  qualified  employees  at  their   disposal,  dwarfing  TD's  70,000  and  CIBC's  41,941.  The  remarkable  differences  in  human  capital   along  with  the  financial  and  physical  size  of  the  bank  provides  great  resources  and  potential  that   will  serve  as  a  major  competitive  advantage  for  the  company  and  an  opportunity  to  even  further   continue  its  success.   With  four  of  the  major  banks  of  Canada  ʹ  RBC,  BMO,  TD,  and  CIBC  having  roughly  comparable  fees   and  interest  rates  for  a  basic  chequing  and  savings  accounts  along  with  a  similar  range  of   services(Refer  to  Appendix  A  ʹ  Fig.3),  the  bulk  of  competition  is  bound  to  arise  from  less   measurable  factors  such  as  a  bank's  brand  positioning  and  the  consumer's  perception.  Although  the   competitive  advantage  of  the  size  of  the  merged  bank  is  evident,  there  are  competitive  threats  in   other  significant  aspects  of  the  banking  industry  that  RBC  and  BMO  need  to  be  consider.     The  customer's  perceived  benefit  of  convenience  and  satisfaction  is  prevalent.  Referring  to   Appendix  A  ʹ  Fig.  4,  J.D.  Power  and  Associates  2010  Customer  Satisfaction  Index  Rating  (Based  on  a   8  |  P a g e    


1000-­‐point  scale),  TD  topped  both  RBC  and  BMO  in  customer  satisfaction  ratings.  Although   customer  satisfaction  is  a  less  quantifiable  advantage  compared  to  size,  it  is  an  important  one.  TD   currently  has  a  positioning  statement  directly  addressing  the  emphasis  it  puts  on  convenience  for   its  customers  -­‐  ͞ĂŶŬŝŶŐĐĂŶďĞƚŚŝƐĐŽŵĨŽƌƚĂďůĞ͘͟&ƌŽm  this  positioning  statement  to  their  simple   and  easy  to  use  online  banking  system,    to  their  high  volume  of  branches  and  extended  hours  of   operation,  TD  is  successfully  positioning  itself  as  the  most  convenient  bank  to  customers.  This   success  is  reflected  in  both  their  leadership  of  personal  deposits  and  lending,  as  well  as  their   coveted  top  customer  satisfaction  rating.  Although  the  competitive  advantage  of  size  remains   incredibly  strong,  the  option  for  customers  tŽƐǁŝƚĐŚƚŽƚŚĞƐĞĐŽŶĚďŝŐŐĞƐƚďƵƚĂůƐŽ͞ŵŽƐƚ ĐŽŶǀĞŶŝĞŶƚ͟ďĂŶŬŝƐĂŵĂũŽƌƚŚƌĞĂƚ͘  

Target  Market   dŚĞƚĂƌŐĞƚŵĂƌŬĞƚŽĨZĂŶĚDKŝƐƉƌĞĚŽŵŝŶĂŶƚůLJĐŽŵƉƌŝƐĞĚŽĨĂŶĂĚĂ͛ƐǁŽƌŬŝŶŐƉŽƉƵůĂƚŝŽŶ ages  14  to  65  (Statistics  Canada,  2009).  Currently  RBC  is  known  for  targeting  business  consumers   and  BMO  is  known  for  targeting  consumers  for  personal  banking.  Together,  they  encompass  the   majority  of  the  Canadian  population.  This  creates  a  large  target  market  that  is  hard  to  define.  The   following  includes  key  information  reŐĂƌĚŝŶŐZ͛ƐĂŶĚDK͛ƐĐƵƌƌĞŶƚƚĂƌŐĞƚŵĂƌŬĞƚƐĂŶĚĨƵƚƵƌĞ target  market  as  a  merged  bank.    

Demographic   Currently  BMO  and  RBC  offer  accounts  and  services  for  both  business  and  personal  banking.   Personal  banking  includes  special  accounts  and  services  for  students  and  seniors.     As  shown  in  Appendix  A  ʹ  Fig.  8,  banks  target  Canadians  ranging  between  the  approximate  ages  of   14  to  65.  The  highest  concentration  of  the  population  is  between  the  ages  of  35  to  54  making  up   30.1%  of  all  Canadians  (Canadian  Council  on  Social  Development,  2011).The  population  is  steadily   increasing  which  can  be  observed  in  Appendix  A  ʹ  Fig.  6.  From  1999  to  2003,  there  was  a  steady   growth  rate  of  1%  per  year  (Datamonitor,  2004).   Consumers  of  all  ages  use  banking  services,  however  there  are  key  members  in  the  household  who   make  decisions.  On  average  families,  all  use  the  same  bank.  The  decision  of  which  bank  to  choose  is   made  by  the  household  decision  maker.  There  are  many  different  compositions  of  households   within  Canada  as  demonstrated  by  Appendix  A  ʹ  Fig.  5  therefore  the  decision  maker  for  each   household  may  vary  depending  on  its  composition.  41.4%  of  families  are  made  up  of  couples  with   children;  we  assume  that  the  parents  make  joint  decisions.  In  traditional  household,  the  father   figure  is  the  decision  maker  (Net  Industries,  2011).  In  households  with  only  one  parent  which  makes   up  15.6%  of  families  Appendix  A  ʹ  Fig.  5  and  single  adults  who  make  up  41.8%  of  the  population   Appendix  A  ʹ  Fig.  7,  they  are  the  primary  decision  maker(s).      

Geographic      ͞EŝŶĞƚLJƉĞƌĐĞŶƚŽĨƚŚĞĂŶĂĚŝĂŶƉŽƉƵůĂƚŝŽŶŝƐůŽĐĂƚĞĚǁŝƚŚŝŶϭϲϬŬŝůŽŵĞƚƌĞƐŽĨƚŚĞh͘^͘ďŽƌĚĞƌ͟ (Advameg  Inc.,  2011).  Appendix  A  ʹ  Fig.  9  shows  a  representation  of  the  areas  in  Canada  with  the   highest  concentrations  of  RBC  and  BMO  locations  prior  to  the  merge  (Google,  2011).  The  areas  with   the  highest  concentrations  of  RBC  and  BMO  locations  are  typically  in  the  highest  populated  areas.   9  |  P a g e    


Some  of  these  Urban/Suburban  areas  include,  Vancouver,  Calgary,  Montreal,  Ottawa,  Regina,   Saskatoon,  Winnipeg  and  Toronto.  

Psychographic   The  following  Prizm  life  style  clusters  populate  the  highest  populated  geographic  areas:  Urban  Elite,   Suburban  Elite,  Suburban  Upscale  Ethnic,  and  Suburban  Mid-­‐scale  (Environics  Analytics,  2010).  The   majority  of  the  Canadian  population  is  made  up  of  The  Urban  Elite.  Of  this  life  style  cluster,   approximately  80%  of  people  in  this  segment  are  employed  and  a  majority  have  higher  than  a  high   school  education  and  are  between  the  ages  of  35  to  64.  The  Urban  Elite  like  spend  their  time   enjoying  recreational  activities,  traveling,  going  out  for  dinner  and  going  to  see  movies  and  shows.   This  life  style  cluster  is  very  diverse  and  has  many  different  interests.  (Environics  Analytics,  2010)   The  consumers  of  RBC  and  BMO  are  concerned  with  corporate  social  responsibility.  As  mentioned   in  Key  Findings,  consumers  value  charity  and  community  work  that  is  done  by  businesses  such  as   financial  institutes.  Consumers  value  business  accountability,  environmentally  friendly  products  and   services,  recycling,  energy  efficient  products  &  buildings  and  community  involvement  of  businesses   (Industry  Canada,  2009).  

Buying  behaviour   Consumers  of  BMO  and  RBC  value  quality  products  and  value  for  money  (Industry  Canada,  2009)   and  do  not  like  to  pay  large  amounts  of  money  for  transactions  and  banking  fees  as  mentioned   earlier  in  the  Key  Findings.  They  are  also  very  loyal  to  their  bank  and  do  not  switch  easily  due  to   inconvenience.    

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Alternative  1:  The  Leading  Bank  of  Canada  (LBC)   Positioning  Strategy:  Leadership   For  this  alternative,  the  primary  focus  is  on  the  leadership  that  BMO  and  RBC  are  taking  on,   while  showing  a  huge  amount  of  trust  with  one  another.  Many  consumers  are  looking  for   security  and  safety  that  have  low  risks  when  it  comes  to  their  finances  (McGregor,  2000).     The  Leading  Bank  of  Canada  is  designed  to  acknowledge  this  merge  as  a  serious  one  ʹ  more  of  a   business  approach.  BMO  and  RBC  are  completely  aware  that  this  merge  will  cause  people  to   become  more  anxious  about  what  will  happen  to  their  finances  and  assets,  as  well  as  their   sense  of  securiƚLJ͘dŚŝƐĂůƚĞƌŶĂƚŝǀĞĂůƐŽĂĐŬŶŽǁůĞĚŐĞƐƚŚĂƚDKŝƐŽŶĞŽĨĂŶĂĚĂ͛ƐŵŽƐƚƚƌƵƐƚĞĚ banks  since  it  has  been  part  of  Canada  since  1817.  By  displaying  a  sense  of  trust  within  one   another  (including  combining  all  assets)  and  sharing  that  ideal  with  consumers,  The  Leading   Bank  of  Canada  demonstrates  that  this  merge  is  safe.     Positioning  Statement:   dŚĞ>ĞĂĚŝŶŐĂŶŬŽĨĂŶĂĚĂŝƐĚĞƐŝŐŶĞĚƚŽĞŶƐƵƌĞĞǀĞƌLJĐƵƐƚŽŵĞƌ͛ƐĂƐƐĞƚƐĂƌĞƐĞĐƵƌĞʹ  and  to   give  consumers  that  extra  piece  of  mind.     Creative  Strategy   x Theme:  ͞zŽƵ͛ǀĞƚƌƵƐƚƚŚĞĂŶŬŽĨDŽŶƚƌĞĂůƐŝŶĐĞϭϴϭϳ͙ƐŽĚŽǁĞ͘͟   x Appeal:  Security   x Tone:  Serious     Advantages   1. Acknowledges  merge  on  a  large   scale.  By  doing  so,  LBC  is  able  to  be   completely  honest  about  the   changes  due  to  the  merge  (allows   for  transparency).   2. ,ĂǀŝŶŐƚǁŽŽĨĂŶĂĚĂ͛ƐƐƚƌŽŶŐest   banks  merging  into  one  causes   anxiety  to  consumers.  LBC  allows  for   consumers  to  see  the  banks  trust   one  another  during  such  a  big   change.  This  ensures  a  true  sense  of   security.   3. This  alternative  focuses  in  what   Canadians  feel  strongly  about  in   terms  of  values  ʹ  Appendix  A  Fig.  2   (McGregor,  2000).   11  |  P a g e    

Disadvantages   1. This  alternative  mostly  focuses  on   RBC  trusting  BMO  and  not  BMO   trusting  RBC  equally.  This  could   cause  some  questioning  amongst   consumers  who  were  part  of  BMO   before  the  merge.   2. Focuses  more  on  security,  rather   than  the  overall  image.  People  may   see  the  issue  of  security  being   ĂĚĚƌĞƐƐĞĚ͕ďƵƚŶŽƚƚŚĞĐŽŵƉĂŶLJ͛Ɛ overall  brand.   3. Consumers  may  see  campaign  as   too  serious.  LBC  may  cause  anxiety   amongst  consumers.  


Alternative  2:  United  Bank  of  Canada   Positioning  Strategy:  User  Group   This  alternative  uses  a  user  group  positioning  strategy.  By  positioning  the  bank  as  proudly   Canadian,  this  strategy  would  capitalize  on  Canadian  nationalism  and  associate  itself  with  the   strong  Canadian  national  brand  (Nevin,  2010).    The  bank  would  be  named  the  United  Bank  of   Canada,  showing  that  the  merged  banks,  like  Canadians  are  uniting  and  working  proudly   together  for  a  better  future.  This  emotional  appeal  would  give  current  users  a  sense  of  pride  in   their  nationality  and  patriotism  as  well  as  in  their  strong  banking  institution.   Positioning  Statement:   Making  banking  easier  to  use  and  incredibly  accessible  for  all  Canadians.  Extending  from  sea  to   sea,  real  Canadian  banks  uniting  real  Canadian  people.     Creative  Strategy:   x Theme:  ͞hŶŝƚLJamong  Real  Canadian  People;  Unity  among  RĞĂůĂŶĂĚŝĂŶĂŶŬƐ͘͟   x Appeal:  Emotional   x Tone:  Patriotic     Advantages   1. Able  to  capitalize  on  the  Royal  Bank  of   ĂŶĂĚĂ͛ƐƐƉŽŶƐŽƌƐŚŝƉŽf  the  2010   Winter  Olympic  Games  (nationalism,   nostalgia).     2. Positioned  as  being  an  All-­‐Canadian  bank   (being  run  by  similar  people  to  the   users),  thus  giving  consumers  some   sense  security  and  of  control  over  their   money,  both  of  which  are  important   values  for  Canadians  (McGregor,  2000).     3. Feelings  of  patriotism  are  consistent   among  all  Canadian  demographics,   hugely  broadening  the  scope  of  the   target  audience.    

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Disadvantages   1. The  explicit  focus  on  Canadian   consumers  may  alienate  international   clients  and  restrict  global  expansion   while  riskily  depending  fully  on  Canadian   business.   2. People  may  feel  the  forwardness  of  the   Canadian  brand  has  been  overdone  and   over-­‐marketed  due  to  the  2010   Olympics.   3. Emphasizing  the  large  scale  of  the  bank,   it  may  face  the  same  problem  it  did  in   1998,  when  the  sheer  size  of  the  new   bank  hindered  support  for  it   (MacKenzie,  2000).  


Alternative  3:  Emerge  Financial     Positioning  Strategy:  Lifestyle   For  this  alternative,  Emerge  Financial  will  be  positioned  as  being  new  and  exciting.  Using  a   ŚƵŵŽƌŽƵƐĂŶŐůĞ͕ŽůĚĞƌďĂďLJŵĞƌƐǁŝůůďĞƐĞĞŶŝŶĂĚƐĚŽŝŶŐƐŽŵĞƚŚŝŶŐ͞LJŽƵŶŐ͕͟ĨŽƌ example,  skiing  while  dressed  in  very  fashionable  gear  or  surfing  in  an  exotic  place.  The  older   baby  boomers  will  be  a  personification  of  the  merged  bank.  While  they  are  old  just  like  RBC  and   BMO,  the  merge  is  a  new  beginning.  The  baby  boomers  have  lots  of  knowledge  and  wisdom,  as   do  the  two  banks,  but  they  are  also  ready  to  break  free  and  reconnect  with  their  youth.  As  well,   many  baby  boomers  take  looking  and  feeling  young  very  seriously  so  positioning  Emerge   &ŝŶĂŶĐŝĂů͛ƐďƌĂŶĚƚŚŝƐǁĂLJĐŽƵůĚďĞĂƚƚƌĂĐƚŝǀĞ;ZŝƐĞŶ͕ϮϬ06).     Positioning  Statement:   You  already  know  that  our  banks  are  well  established  and  trusted  worldwide.  The  merge  of   BMO  and  RBC  demonstrates  our  movement  towards  the  future  of  better  banking.   Creative  Strategy   x Theme:  ͞tŚŽƐĂLJƐďĂŶŬŝŶŐŚĂƐƚŽďĞďŽƌŝŶŐ͍͟   x Appeal:  Humorous     x Tone:  Light-­‐hearted  and  exciting     Advantages   1. This  new,  fresh  image  appeals  to  a   large,  fairly  wealthy  target  audience  of   baby  boomers  who  can  bring  valuable   assets  to  the  bank.   2. None  of  the  other  big  Canadian  banks   have  been  positioned  in  this  way   before.  This  means  that  Emerge   Financial  will  be  seen  differently  than   the  rest,  making  it  unique  and   innovative.   3. Many  current  customers  will  want  to   stick  around  with  the  Emerge  Financial   to  see  how  the  new  image  will  improve   their  banking  needs,  while  new   customers  will  be  attracted  towards   joining  the  merged  bank  for  a  new,   exciting  experience.    

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Disadvantages   1. The  new  bank  may  lose  credibility  and   not  be  taken  seriously  because  of  this   new  image  and  banking  concept.   2. Baby  boomers  may  not  appreciate   how  they  are  being  portrayed  or  may   not  connect  with  the  feelings   associated  in  the  advertisments.     3. This  positioning  could  create  too  much   ŽĨĂ͞ŶŝĐŚĞ͟ĨĞĞůŝŶŐĂŵŽŶŐĐŽŶƐƵŵĞƌƐ͘ The  existing  clientele  may  not  be   happy  with  the  fact  that  their  bank  is   now  the  largest  in  Canada  but  it  does   not  represent  the  variety  of  people  or   lifestyles  associated  with  RBC  and   BMO.  


Solution   The  alternative  that  was  chosen  based  on  ability  to  answer  our  initial  problem  statement:   Which  brand  positioning  strategy  will  allow  the  merged  bank  to  position  itself  as  a  strong   Canadian  financial  institution  both  nationally  and  internationally,  without  alienating  its  current   customer  base  and  having  the  most  positive  brand  awareness  of  any  Canadian  bank  as  measured   by  a  survey  one  year  after  the  merge?   Alternative  2,  United  Bank  of  Canada,  was  the  option  that  best  answered  the  problem  statement.   This  bank  has  a  strong  image  of  pride,  nationalism,  and  most  importantly,  unity.  This  kind  of  image   and  brand  is  easily  transferable  across  the  nation  and  it  does  not  just  focus  on  the  unity  of  the   banks,  which  is  what  Alternative  1  conveyed.  Instead,  it  focuses  on  unity  of  Canada  and  Canadians.   The  strong  sense  of  pride  of  who  we  are  as  individuals  allows  for  a  much  larger  target  market  to  be   attracted  to  this  bank.  Alternative  3  was  too  focused  on  baby  boomers  and  the  question  of   seriousness  was  also  an  issue.  United  Bank  of  Canada  is  incredibly  focused  and  more  people  are   able  to  connect  with  this  brand  on  a  much  deeper  level.   Internationally,  this  solution  can  be  used  to  position  United  Bank  of  Canada  as  a  safe  and  secure   place  for  investments.  As  the  Canadian  economy  is  strong,  it  encourages  other  nations,  especially   the  United  States  to  invest  in  the  merged  bank.  The  US  economy  is  still  weak,  so  by  showing  them   that  Canada  offers  them  a  large,  secure  bank,  United  Bank  of  Canada  would  be  able  to  attract  and   retain  international  recognition  and  attention.  Canada  is  already  seen  as  a  leader  in  world  banking   so  by  creating  a  patriotic  identity,  United  Bank  of  Canada  would  be  memorable  as  international   ĐƵƐƚŽŵĞƌƐǁŽƵůĚƐĞĞƚŚĞďĂŶŬĂƐ͞ƚŚĂƚƚƌƵůLJĂŶĂĚŝĂŶďĂŶŬ͟ƚŚĂƚĞǀĞƌLJŽŶĞǁĂŶƚƐƚŽŝŶǀĞƐƚŝŶ͘    After   the  merge,  the  new  United  Bank  of  Canada  is  positioned  with  high  convenience,  high  customer   satisfaction,  high  number  of  branches,  and  high  total  assets.  Refer  to  Appendix  B  for  positioning   charts  from  before  the  merge  and  after  the  merge.  United  Bank  of  Canada  is  represented  by  the   new  logo  (see  below).  

United  Bank  of  Canada   ͞hŶŝƚLJ  among  Real  Canadian  People;  Unity  among  RĞĂůĂŶĂĚŝĂŶĂŶŬƐ͘͟  

 

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Plan  of  Action   In  order  for  United  Bank  of  Canada  to  properly  convey  their  new  brand  and  position,  the  plan  of   action  must  be  very  clear  and  focused.  By  doing  so,  consumers  will  understand  exactly  what  they   are  trying  to  convey  ʹ  the  feeling  of  unity.   Our  campaign  is  based  on  Appendix  A  ʹ  Figure  10.  With  a  budget  consisting  of  approximately   $40.65  million,  United  Bank  of  Canada  is  able  to  cover  cost  for  a  massive  advertising  campaign   worldwide.  When  looking  at  RBC's  financial  statements  for  2010,  communications  expenses  totaled   $813  million.  RBC  was  the  official  bank  sponsor  of  the  Winter  Olympics,  and  paid  $110  million  alone   for  the  rights  to  use  the  Vancouver  Winter  Olympics  in  its  advertising  (CBC  News,  2010).  Other   factors  such  as  the  production  costs  of  these  Olympic  ads  and  higher  advertising  space  costs  for  TV   and  print  have  to  be  considered.  As  well,  United  Bank  of  Canada  will  need  other  budgets  for  other   campaigns  and  communications  expenses.    A  realistic  budget  for  this  IMC  campaign  would  be  5%  of   the  2010  communications  expenses.  This  would  give  United  Bank  of  Canada  $40.65  million  for  their   branding  needs  in  Canada  and  in  international  markets.    All  of  these  IMC  tools  will  be  made  in  both   English  and  French  for  Canadian  cities  (this  further  embraces  the  feeling  of  unity  as  a  nation).  The   steps  will  be  as  followed:   Step  1  (immediately):   x

Send  letter  to  all  consumers  of  previous  banks,  BMO  and  RBC,  to  welcome  them  to  United  Bank   of  Canada.  This  letter  will  explain  what  they  can  expect  from  the  merge  and  what  they  will   benefit  from.   x Send  media  releases  to  all  major  city  papers  and  news  stationsʹ  newspaper  ads  begin   x Hold  press  conference  to  announce  merge  as  a  way  to  further  unite  Canada   Step  2:   x

30  second  TV  ads  begin  and  Newspaper  ads  are  distributed  at  a  higher  density  ʹ  more  TV  ads  in   the  beginning  stages  of  merge  and  will  slowly  reduce  in  frequency  as  they  year  progresses   Step  3  (3rd  quarter):   x Social  media  should  be  used  throughout,  but  at  this  stage  it  will  be  used  at  a  higher  frequency.     x TV  ads  are  less  frequent   Step  4  (last  quarter):   x

United  Bank  of  Canada  has  a  strong  brand  and  their  ads  should  be  more  recognizable  at  this   point.     x ^ĞŶĚĂ͞dŚĂŶŬzŽƵ͟ůĞƚƚĞƌƚŽƚŚĞŝƌůŽŶŐƚŝŵĞĐonsumers  for  their  loyalty  and  a  letter  to  new   consumers  for  joining  them  ʹ  both  mentioning  their  success  as  a  new  bank   x A  survey  will  conducted  to  ensure  United  Bank  of  Canada  is  on  track  with  their  consumers  and   ensuring  their  consumers  are  satisfied  with  their  services   x Announce  to  public  about  their  first  year  and  results  of  survey  (including  what  they  are  going  to   change)   Our  international  plan  of  action  would  be  similar  to  what  is  stated  above.  Public  relations  will  be   stressed  because  we  are  now  going  into  markets  that  may  not  know  anything  about  the  merger,   15  |  P a g e    


unlike  in  Canada  where  knowledge  of  the  merger  was  spreading  before  it  even  happened.   Advertising  similar  to  the  examples  in  the  appendix  will  be  used  in  print.  Television  advertising  will   be  used  to  explain  the  trustworthiness  of  United  Bank  of  Canada,  explaining  what  it  has  to  offer  to   international  investors.  The  survey  will  be  sent  to  international  customers  at  the  end  of  the  first   year  to  measure  United  Bank  of  Canada's  success.       United  Bank  of  Canada  has  an  incredibly  strong  image  on  who  they  are  and  what  they  represent.  It   is  important  that  throughout  the  campaign  that  they  keep  the  public  informed  of  their  progress.  By   doing  so,  they  further  extend  their  loyalty  to  their  consumers  and  the  idea  of  unity.  This  campaign   will  reach  out  to  all  consumers  and  focuses  on  what  is  important  to  Canadians  ʹ  a  united  national   identity.  Please  refer  to  Appendix  A  ʹ  Fig.  11-­‐13  for  ads  that  will  be  distributed  worldwide.  

Course  Concepts     Consumer  Values  ʹ  Used  in  Key  Findings  to  describe  what  is  important  to  Canadians  when  it  comes  to   their  financial  institutions   Brand  loyalty  ʹ  used  in  the  SWOT  Analysis  to  describe  existing  consumers  that  will  stay  with  the  merged   back  after  the  merger   Cost-­‐effectiveness  ʹ  used  in  the  SWOT  Analysis  to  describe  the  way  the  new  merged  bank  will  deliver  its   services   Brand  awareness  ʹ  used  in  the  SWOT  Analysis  to  describe  various  tactics  used  by  foreign  competitors   ING  Direct   Brand  affiliation  ʹ  used  in  the  SWOT  Analysis  to  describe  various  marketing  strategies  carried  out  by   foreign  competitors  ING  Direct   Positioning  Statement  ʹ  hƐĞĚŝŶ<ĞLJ&ŝŶĚŝŶŐƐǁŚĞŶĚĞƐĐƌŝďŝŶŐƚŚĞƉŽƐŝƚŝŽŶŝŶŐŽĨZĂŶĚDK͛Ɛ competitors  

         

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Work  Cited   Advameg  Inc.  (2011).  Canada.  Retrieved  from  Encyclopedia  of  Nations:   http://www.nationsencyclopedia.com/economies/Americas/Canada.html   BMO  Financial  Group.  (2011,  February  18).  Canadian  Funds  Rates.  Retrieved  Feburary  18,  2011,  from   BMO  Financial  Group:  http://www.bmo.com/home/personal/banking/rates/bank-­‐accounts?nav=left   Canadian  Council  on  Social  Development.  (2011).  Families:  A  Canadian  Profile.  Retrieved  from  Stats  &   Facts:  http://www.ccsd.ca/factsheets/  

CBC  News.  (2010).  Bank  marketing  campaign  on  thin  ice:  VANOC.  Retrieved  on  February  20,  2011   CIBC.  (2011,  February  18).  Bank  Accounts.  Retrieved  February  18,  2011,  from  CIBC:   http://www.cibc.com/ca/chequing-­‐savings/index.html   Datamonitor  .  (2004).  Banks  in  Canada  -­‐  Industry  Profile.  Datamonitor.   Datamonitor.  (2010).  Bank  of  Montreal  -­‐  Company  Profile.  Datamonitor  plc.   Datamonitor.  (2010).  Canada  Country  Profile.  Datamonitor  plc.   Datamonitor.  (2010).  Royal  Bank  of  Canada  -­‐  Company  Profile.  Datamonitor  plc.  

Egan  and  Hodgson.  (2010).  G20  -­‐  Recognizes  risk  of  double-­‐dip  recession  .  Retrieved  from  Reuters:   http://www.reuters.com/article/2010/06/27/g20-­‐flaherty-­‐idUSWNA437720100627   Environics  Analytics.  (2010).  Prizm  Segmentation  .     Euromonitor.  (2009).  Banking  and  Financial  Services  Consumer  Lifestyles  -­‐  Canada.  Global  Market   Information  Database.   Forbes.  (2010,  April  4).  The  Global  2000.  Retrieved  February  18,  2011,  from  Forbes  Magazine:   http://www.forbes.com/lists/2010/18/global-­‐2000-­‐10_The-­‐Global-­‐2000-­‐Canada_10Rank.html   Google.  (2011).  Google  Maps.  Retrieved  from  Google:   http://maps.google.ca/maps?hl=en&client=firefox-­‐a&hs=3dG&rls=org.mozilla:en-­‐ GB:official&q=bmo%20locations&um=1&ie=UTF-­‐8&sa=N&tab=wl   Industry  Canada.  (2009).  Corporate  Social  Responsibility-­‐  Consumer  Role  in  CSR.  Retrieved  from  Industry   Canada:  http://www.ic.gc.ca/eic/site/csr-­‐rse.nsf/eng/h_rs00164.html   J.D.  Power  and  Associates.  (2010).  Press  Release.  The  McGraw-­‐Hill  Companies.   Keeler,  D.  (2010,  September  13).  WORLD'S  50  BIGGEST  BANKS  2010.  Retrieved  February  18,  2011,  from   Global  Finance:  http://www.gfmag.com/tools/best-­‐banks/10619-­‐worlds-­‐50-­‐biggest-­‐ banks.html#axzz1DsRmRbhU/   17  |  P a g e    


MacKenzie,  H.  H.  (2000).  Royal  Bank  of  Canada  and  Bank  of  Montreal:  The  Proposed  Merger.   Contemporary  Canadian  Marketing  Cases,  Second  Edition  .   Net  Industries.  (2011,  February  18).  Decision  Making  -­‐  Authority  And  Status.  Retrieved  February  18,   2011,  from  Marriage  and  Family  Encyclopedia:  http://family.jrank.org/pages/353/Decision-­‐Making-­‐ Authority-­‐Status.html   Nevin,  M.  (2010,  November  5).  Canada  ranked  No.  1  country  brand  in  the  world.  Retrieved  February  18,   2011,  from  Media  Centre:  http://mediacentre.canada.travel/content/media_release/futurebrand2010   Newswire.  (2010,  January  25).  CIBC  launches  second  phase  of  national  brand  advertising  campaign.   Retrieved  February  18,  2011,  from  CNW  Group:   http://www.newswire.ca/en/releases/archive/January2010/25/c2832.html   RBC  Canada.  (2011,  February  18).  Automated  Banking  Machines.  Retrieved  February  18,  2011,  from  RBC   Royal  Bank:  http://www.rbcroyalbank.com/business/solutions/24hr-­‐access/banking-­‐machine.html   RBC  Canada.  (2011,  February  18).  Welcome  to  Rates.  Retrieved  February  18,  2011,  from  RBC  Royal  Bank:   http://www.rbcroyalbank.com/rates/index.html   RBC  USA.  (2011,  January  25).  Company  Profile.  Retrieved  February  18,  2011,  from  RBC  Bank  USA:   http://www.rbcbankusa.com/company/cid-­‐96904.html   Risen,  C.  (2006,  December  10).  Psychological  Neoteny  .  Retrieved  February  18,  2011,  from  The  New  York   Times:  http://www.nytimes.com/2006/12/10/magazine/10section3a.t-­‐3.html   Statistics  Canada.  (2009,  July  1).  Canada's  population  estimates:  Age  and  sex.  Retrieved  February  18,   2011,  from  Statistics  Canada:  http://www.statcan.gc.ca/daily-­‐quotidien/091127/dq091127b-­‐eng.htm   TD  Canada  Trust.  (2011,  February  18).  TD  Canada  Trust  GIC  and  Term  Deposit  Product  and  Rate   Information.  Retrieved  February  18,  2011,  from  TD  Canada  Trust:   http://www.tdcanadatrust.com/GICs/GICTable.jsp      

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Appendix  A   Figure  1  

  Figure  2     Canadian  Values  (McGregor,  2000)   x x x x x x x x

Self-­‐Control:  Canadian  consumers  want  anchors  in  their  lives,  trustworthiness,  satisfaction,   relaxation  and  rewards  from  taking  control  of  their  lives   Substance  and  Quality:  Want  products  and  services  that  are  straightforward,  reliable  and  have   staying  power   Risk-­‐Management:  Canadians  want  security  and  safety  leading  to  lower  risk  with  their  finances   Accountability  and  Responsibility:  Consumers  are  developing  a  new  critical  awareness  on  their   contributory  role  in  the  market  place  rather  than  taking  things  for  granted   Altruism  and  Charity:  There  is  projected  growth  in  giving,  charity  and  community  work  by  the   consumer  and  the  business   Balance  and  Moderation:  Looking  for  stability  and  harmony  in  stressful  lives  of  today   Environment:  Growing  awareness  of  the  impact  of  personal  and  business  decisions  on  personal   and  environmental  health   Health  and  Fitness:  By  2021,  about  40%  of  Canadians  will  be  over  50  years  old.  An  ageing   population  is  accompanied  with  an  upswing  in  the  number  of  health  problems  exacerbated  by   longevity  in  stressful,  time-­‐crunched  lives  

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Figure  3   Attributes  

Royal  Bank  of   Canada  

Bank  of  Montreal   Toronto  Dominion   Canadian  Imperial   Bank  of  Commerce  

Number  of   Branches/Tellers  

1,741  branches,   4,964  automated   tellers    

900  branches,   2,000  branches,   +2000  automated   2,600  automated   tellers   tellers        

1,596  branches,   3,800  automated   tellers    

Number  of   Employees  

80,000    

36,173    

74,000    

41,941  

General  Hours  of   Operation  

Mon-­‐Thurs:  930am-­‐ 5pm   Friday:  930am-­‐6pm   Saturday:  9am-­‐4pm   Sunday:  closed  

Mon-­‐Wed:930am-­‐ 4pm   Thurs-­‐Fri:  930am-­‐ 6pm   Saturday:930am-­‐ 4pm   Sunday:  closed  

Mon-­‐Wed:  8am-­‐6pm   Thurs-­‐Fri:  8am-­‐8pm   Saturday:  8am-­‐4pm     *Sunday:  12pm-­‐4pm   (+300  branches   open)  

Mon-­‐Wed:  930am-­‐ 4pm   Thurs-­‐Fri:  9:30am-­‐ 5pm   Saturday:  9:30am-­‐ 4pm   *Sunday:  closed   (except  for  30   branches)  

Total  Assets  

$608  billion    (USD)   $360.62  billion   (USD)  

$517.28  billion   (USD)  

$316.51  billion   (USD)  

 

 

$14.92  billion   (USD)  

$23.60  billion   (USD)  

$13.20  billion   (USD)  

$2.90  billion   (USD)  

$1.58  billion  (USD)  

Annual  Revenue   2009  

$35.14  billion   (USD)  

Profit  2009  

$3.58  billion  (USD)   $1.66  billion   (USD)  

Range  of  Services   Personal   and  commercial   banking,  wealth   management,   insurance,   corporate  and   investment   banking  and  

Retail  banking,   wealth  

Personal  banking   and  commercial   banking,   management  and   brokerage  services,   investment   capital  market   banking  products   services,  and   and  solutions.   wealth   management.  

Retail  banking,   credit  card   services,  and  asset   management,  and;   credit  and   investment   advisory  services.  

transaction   processing.   Monthly  Fee  on   20  |  P a g e    

No  Limit  Banking     Performance  Plan   Infinity  Account  

Unlimited  


Unlimited   $10.95/month   Chequing  Accounts  

13.95/month  

$12.95/month  

Chequing  Account   $12.95/month  

Interest  Rate  on     RBC  High  Interest   Smart  Saver   Basic  High  Interest   eSavings  1.25%  (all   1.350%  (min.   Savings  Account   balances)   $5000)  

TD  High  Interest   CIBC  eAdvantage   Savings  1.25%   Savings  1.35%   (min.  $5000  ʹ  max.   (min.  $5000)   $5,000,000)  

Positioning   Statement  

͞ĚǀŝĐĞLJŽƵĐĂŶ ďĂŶŬŽŶ͘͟  

͞ĂŶŬŝŶŐĐĂŶďĞ ͞&ŽƌǁŚĂƚ ƚŚŝƐĐŽŵĨŽƌƚĂďůĞ͘͟   ŵĂƚƚĞƌƐ͘͟  

Other  

Top  mutual  fund   provider  among   Canadian  banks  

͞DĂŬŝŶŐŵŽŶĞLJ ŵĂŬĞƐĞŶƐĞ͘͟  

Acquired  AIG  Life   Insurance   Company  of   Canada  in  January,     2009   Largest  Canadian     Market  share  is   bank  owned   insurer  and  one  of   69.7%  Canadian   and  95%  Canadian   and  American   the  top  10   Canadian  life   insurance   producers    

Acquisition  of   Commerce   Bancorp  in  the  US     Exposure  to  Enron   related  legal  issues     Leading  market   share  in  the  

Second  largest  

 

 

of  Canadian  banks   having  largest   multi-­‐channel   distribution   networks  providing   24/7  access  to  

banking  services   Canadian  personal   through  ABMs,   online  banking,   deposits  market   and  is  the  second   online  brokerage   largest  lender  of   and  telephone   banking  channels.   personal  loans  

  Figure  4   J.D  Power  and  Associates  2010  Customer  Satisfaction  Index  Ranking  (Based  on  a  1000-­‐point   scale)   RBC   BMO   TD   CIBC   721            

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712  

748  

696  


Figure  5  

          Figure  6  

 

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Figure  7                      

Figure  8          

       

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Figure  9   (Google,  2011)    

Areas  of  highest  concentration  of   branches:  

 

 

 

RBC  locations  

 

 

 

BMO  locations  

 

 

                                 

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Figure  10  

   

Figure  11    

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Figure  12  

    Figure  13  

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Figure    14  

Strengths  

Weaknesses  

 

 

¾ Largest  market  share  of  Canadian  financial   services  industry   ¾ Accessibility  &  efficiency  using  technological   advances   ¾ Stability  and  brand  loyalty    

¾ Quality  and  quantity   ¾ Bank  closures  and  unforeseen  costs  

Opportunities  

Threats  

 

 

¾ Baby  boomers  to  increase  mandates  for   retirement  services   ¾ Improving  economic  prospects  in  North   America    

¾ Increase  in  local  competition   ¾ Consumer  concerns   ¾ Increase  in  global  competition  and  foreign   competitors  in  Canada   ¾ Double-­‐dip  recession  

 

 

       

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Appendix  B       Attributes  ʹ  Before  Merge    

 

Number  of  branches   High  

         

 

Total  Assets   Low  

Total  Assets                        

 

Number  of  Branches   Low    

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High  


Benefits  ʹ  Before  Merge      

Customer  Satisfaction   High  

         

 

Convenience   Low  

Convenience                          

 

Customer  Satisfaction   Low          

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High  


Benefits  ʹ  After  Merge      

CUSTOMER  SATISFACTION   HIGH  

         

 

CONVENIENCE   LOW  

CONVENIENCE                          

 

CUSTOMER  SATISFACTION   LOW          

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HIGH  


Attributes  ʹ  After  Merge      

NUMBER  OF  BRANCHES   HIGH  

         

 

TOTAL  ASSETS   LOW  

TOTAL  ASSETS                        

 

NUMBER  OF  BRANCHES   LOW          

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HIGH  


Case Study - RBC and BMO merger