Page 2: Understanding the market
A business must understand the market that it operates in. It must understand its customers, so that it can provide the goods and services they want. It must know about its competitors. Businesses that fail to match or better the products, prices and service standards offered by competitors will lose customers. This is what happened to first direct for a period. The bank changed some of its terms and conditions, in order to deepen customer relationships and to encourage more usage of the bank. For example, current account customers paying in less than £1,500 a month (and not having other first direct products) were charged a fee. This was a bold move in a banking market in which most individuals did not expect to pay for having a current account.
The initial response to these changes was not encouraging. The media picked up the story and the resulting publicity affected the bank”s reputation for good customer service.
first direct undertook research through a market research agency. This showed that customer perceptions of first direct had dipped. The survey measured the percentage of customers satisfied with the bank at which they held their main current account. first direct was no longer the top-performing bank by this measure.
first direct therefore decided to carry out further market research to identify how to restore the brand. The bank wanted this research to help it:
- assess if its products and services were the right ones for customers
- identify how first directis viewed in comparison with its rivals
- create ideas about how to improve customer awareness, to retain the loyalty of customers and to develop the business