GB500 Unit 3 Marketing Mix Application Example

Renters Under Thirty-Five Saving for a First Home: A Unit 3 Marketing Application for a Credit Union Account

[Student Name]

Purdue University Global

GB500: Business Perspectives

Unit 3 Marketing Application

[Instructor Name]

[Date]

The credit union, its figures and the market are composite and illustrative; the sources cited are real.

The Offering and the Problem

Riverbend Community Credit Union serves about 74,000 members in a mid-sized metropolitan area. Deposits from members under thirty-five have grown less than 1 percent a year for three years, while deposits from older members grew about 4 percent. Younger members open checking accounts but keep their savings elsewhere, often in online banks offering higher rates. The credit union's leaders want to bring those savings in, and a first-time homebuyer savings account is the offering under study.

The Segment

Wendell Smith argued that market segmentation means tailoring an offering to the distinct needs of a defined group rather than pushing one product to everyone (Smith, 1956). Philip Kotler and Kevin Lane Keller add that a useful segment must be measurable, substantial, accessible and actionable (Kotler & Keller, 2016).

The segment here is renters aged 25 to 34, with household incomes between $45,000 and $95,000, living in the credit union's service area, who already hold a checking account with Riverbend. About 9,800 members fit this description in the credit union's own records. They are measurable from membership data, substantial enough to move deposits, accessible through the mobile app they already use, and actionable because their stated goal of buying a first home is something a savings product can serve. Local housing data show that the median first-time buyer in the area needs about $18,000 for a down payment and closing costs, a target large enough to require years of saving.

The segment is defined by life stage, income and renting status, all of which the credit union can find in its own records, so it can be reached rather than only described.

The Competition

The segment's savings currently sit in three places. Online banks pay rates about 1.5 points above Riverbend's standard savings rate and open accounts in minutes, but offer nothing tied to home buying. Large national banks offer first-time buyer mortgage programs, but their savings rates are low and their branches are often far from where young renters live. And many in the segment save nothing regularly, keeping cash in checking. The HomeStart Saver has to beat the online banks on purpose rather than rate, beat the national banks on rate and convenience, and give the non-savers a reason to start. That last group may be the largest opportunity, because the goal tracker and payday transfers make saving automatic.

Positioning

Al Ries and Jack Trout treat positioning as the work of claiming a distinct spot in the customer's thinking, defined against whatever else the customer might choose (Ries & Trout, 2001). The statement below names the customer, the benefit and the alternative it is set against.

For renters in their late twenties and early thirties who want to buy their first home, the HomeStart Saver is the savings account that rewards every deposit toward a down payment, unlike online savings accounts that offer a rate but no path to a mortgage.

The Marketing Mix

Product. A savings account with a goal tracker in the mobile app showing progress toward a chosen down payment, automatic transfers on payday and a free session with a mortgage counselor after the first year. Withdrawals are allowed, but the account rewards balances held for twelve months.

Price. A base rate matched to leading online savings accounts, plus a bonus of 1 percentage point on balances up to $20,000 for members who keep the account two years. Members who close a mortgage with Riverbend receive a $500 credit toward closing costs.

Place. Mobile first. The account opens in the app in under five minutes, since the segment rarely visits branches. Branch staff can open it too, but the design assumes a phone.

Promotion. Messages go where renters already look: in the app's home screen for existing members, on rental listing sites in the service area and through partnerships with two large apartment managers that include a flyer in move-in packets. The message is concrete: "Your first $18,000, one paycheck at a time."

Risks

Two risks deserve attention. The rate bonus could attract balances that leave once the two-year period ends, so the account should reward continued saving rather than only the initial deposit. And a mortgage tie-in could backfire if members feel pushed toward a Riverbend loan; the closing credit is offered, not required, and the counselor session is free whether or not the member borrows from Riverbend.

Measurement

Riverbend will track accounts opened by members aged 25 to 34, deposit balances in the segment and conversions to mortgage applications. A first review after six months will compare segment deposits with the prior three years' trend. Kotler and Keller recommend that marketing plans set measurable objectives before launch so that results can be judged against them (Kotler & Keller, 2016). The objective is 1,500 accounts and $6 million in segment deposits in the first year.

References

Kotler, P., & Keller, K. L. (2016). Marketing management (15th ed.). Pearson.

Ries, A., & Trout, J. (2001). Positioning: The battle for your mind (20th anniversary ed.). McGraw-Hill.

Smith, W. R. (1956). Product differentiation and market segmentation as alternative marketing strategies. Journal of Marketing, 21(1), 3-8. https://doi.org/10.1177/002224295602100102