Barclays Capital's market research strategy and customer segmentation approach

Barclays

Quantitative and Qualitative Research

Market Research Methodology-Segmentation and IT

Population and Northern and Eastern Europe-Primary and Secondary Research

F. Performance in the Recession

G. Conclusion

Barclays Capital is a global investment bank that provides business advice and investment solutions to the financial and risk management needs of government, corporate, institutional and slso individual clients. The brand name loyalty that the company enjoys is largely the result of meticulous and detailed statistical research in order to penetrate previously untapped markets, but up defunct, but valuable investments (such as Lehman Brothers) and to simple, conservative commitments longterm to the markets and investments that they have committed to.

Barclays Capital has branches in 56 countries (Businesscasestudies.co.uk 2011 1). Barclays Capital is the fourth largest bank in the United Kingdom. Barclays currently employs 78,000 employees. Barclays Capital has approximately 800 international branches placed throughout Europe, Africa and the Middle East which provide a large array of services including current accounts, savings, mortgages and loans to customers. The fundamental principal underlying Barclays Capital's philosophy is to include the interests of all of their shareholders from customers, employees, shareholders and the wider community en route to providing a valued and prosperous group of satisfied stakeholders (Business Case Studies 2011). It has broadened its reach with the addition of Lehman brothers in 2008 in the wake of its bankruptcy.

C. Market Research Methodology-Segmentation and IT

Question four in our executive summary deals with how Barclay's meets the needs of its customer's by extensive market research. What has given Barclay's an edge in the investment banking business is segmentation. Certainly, one size frequently does not fit all and segmentation customizes an investment portfolio for a client. Every market can be further sub-divided into smaller segments. Such a market segment is a part of a larger customer group that share particular financial characteristics. These include various factors such as age, geography, life stages, or occupation. Within personal banking, segments could very well include categories that include students, graduates, "new to work" individuals, mature, older people and families. By defining these different market segments, financial organisations can ensure they are providing products or services to meet the needs of these customers. In addition to this, appropriate promotional techniques can be used to reach the people in the separate segments. Through the vehicle of segmentation, the firm has been able to improvise the appropriate banking offers that investment clients need in different segments. This approach is helping Barclays Capital to improve its market share of the student accounts market (Businesscasestudies.co.uk 2011).

To continually compete internationally in the investment banking, the company must strive to perform the customer service function with the highest level of excellence. The need to place major client investments requires the most modern and efficient IT systems. IT information that is available online will allow up-to-date information at the keyboard of Barclays managers. This is a huge advantage when it comes to making timely decisions. The fine-tuning of IT eliminates weaknesses within Barclays Capital's practices, thus preventing failures that can effect customers, thereby reducing excessive and unnecessary costs. This will promote brand loyalty with the company as a an investment advisor that can be relied upon . To accomplish this, Barclays Capital must identify their customer groups and the needs that are associated with each particular group and further develop products and services that will be of a great value to their investors. The business practices that have worked in the past for an investor must be reconfigured to work in the years to come. To accomplish such a continual updating of a customer's portfolio, Barclays Capital stays updated regularly with the high changing world of IT and high technology. This calls for new investments into better and higher levels of technology that can help offer higher levels of service to its customers. Along with the apparent increase in speed that IT will allow Barclays Capital to accomplish routine tasks, technology will also reduce risk of errors and fraud (Hwee 2011).

Population and Northern and Eastern Europe-Primary and Secondary Research

Investment strategies led to large profits the past ten years have been propelled by a penetration in the Nordic sector for the Barclaycard card business. Much of this is based upon primary research, such as was involved in processing new data with regard to the Nordic credit card market. To tap this largely untouched resource, the company partnered with ForeningsSparbanken (now Swedbank) of Sweden in an attempt to target the Nordic and hopefully Eastern European markets. This move by Barclays Capital emphasized its attempt to transform Barclaycard into an international card. This Nordic area appeared to be a great target since the number of cards per person is very low. According to Barclays Capital, it is only 0.1 cards per adult in Sweden and 0.4 in Norway as compared to 1.5 cards per person in the UK. Credit Card demand is rising in the Nordic region according to the Swedish central bank. According to their 2005 statistics, credit cards accounted for sixteen percent of the proportion of outstanding consumer credit balances in Sweden, up from six percent in 2002. Of course, Barclays Capital has set its sights set on growth across all of entire Nordic region (Euroinvestor.fr. 2005).

Examples of specific data in the potential size of the investment market are shown in an EU regulatory report where the merger was approved. The merger was approved in committee with no opposition. Prior to the merger, FSB's market share 40-50% within the general credit card market sector for household customers. Such research showed a huge amount of an overseas, healthy credit card market that Barclays Capital had not previously tapped. FSB also possessed some 15% of the Norwegian market. In both of these countries, the potential customer's are good credit risks with plentiful disposable income to back up their credit card purchases (Office for Official Publications of the European Communities, 2005, 4).

Based upon a secondary analysis of FSB's investment database, Barclays Capital decided to pursue an Eastern European strategy. FSB's holdings in Eastern Europe allowed Barclays Capital and Barclaycard greater access into the East European market. This was accomplished via Estonia's AS Hansabank (now Swedbank). Hansabank holds a very strong position in the Baltic region. However, all of Hansa's Eastern European opportunities were not worth going after, an analysis exercise in secondary sources that helped Barclays stay out of economically troubled, emerging Eastern European countries (Euroinvestor.fr). 2005).

FSB's holdings in Hansabank were 98% (Swedbank 2005). In 2007, Hansabank controlled 62% of the entire Baltic (Estonia, Lithuania and Latvia) card market which is located in a small, but quickly developing market which has a high amount of savings and low credit card usage. The 2006-year, as predicted was a particularly good year for Hansabank. They were first among banks in the credit card market in the Baltic and had the largest sector of the deposit market at 32% to back things up (Hansabank/Swedbank 2007 13).

Needless to say, the market research before entering potential markets is critical in predicting how much of a gamble is involved in that market penetration. The market research prior to the entry into the Nordic and Baltic markets was extensive and meticulous and paid off nicely the next year in 2006.

E. Performance During the Recession

Even good companies have their down periods and Barclays Capital is no exception, however, it continued to function without a British government bailout. Barclays Capital saw its full-year profits increase 92% to £11.6bn ($18.2bn) in 2009. This was better than in 2008 when profits were only £1.6bn a figure included hefty write-downs. The company had said that it had loaned about £35bn to businesses and households in 2009 in the U.K. The ability to function without government handouts while other institutions barely stayed afloat was seen as quite an accomplishment (BBC 2010). Certainly, the performance is a tribute to the conservative policies of the investment banking giant.

Their share of the U.S. market increased with the acquisition of the Lehman Brothers investment firm in the wake of its 2008 bankruptcy (Junod 2009). The investment house was acquired for a bargain of 1.75 billion USD and gives the company a strategic part of the U.S. investment capital market. (Teather 2008). In this short-term, this has cost Barclays Capital 33% of its profits (BBC. 2011). However, the investment will likely pay off in the future as the U.S. economy improves further.

F. Conclusion

Certainly, the these moves that we have seen in this short essay foreshadow the fact that Barclays Capital has big plans ahead, however there are many steps that are still needed along the way. Despite a number of setbacks, Barclays Capital has been able to keep a stable credit quality and has kept its delinquency levels low. What is clear is that Barclay's focus has become more international (especially in the Nordic sector of Europe) for the future of its businesses. The company has earned a well deserved reputation for not assuming that one size fits all. Rather, they will customize a portfolio to a clients special needs. This service commands brand-name loyalty and is a feature that Barclays Capital customers can count on in branches all over the world.

The adherence by the company to its core principles has helped it to weather the recession and return to profitably faster and without a government bailout. These features inspire continued faith in the Barclays Capital brand name that will help it to retain current customers and attract future customers who are attracted to its well researched and conservative investment policies.