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Sierra National Bank The top management at the Sierra National Bank was trying to figure out way

the introduction of the marketing concept had been a failure in the bank. These executives were aware of excellent results from introducing the marketing concept in manufacturing firms. But some of them were beginning to wonder whether different conditions were required for the successful implementation of the marketing concept in the banking business. Sierras management began a self-analysis to determine where the bank went wrong and what should be done at this stage. The sierra national bank was a large commercial bank with headquarters in San Francisco and branches throughout the state of California. Regional offices, each headed by a vice president, were located in San Diego, Los Angeles, Bakersfield, Sacramento and Redding. Major policy matters were handled in head office. At the same time, much authority on loans and other matters was decentralized-that is, delegated to the regional offices. Throughout its history, Sierra early expansion had come through internal growth and mergers. The banks growth was satisfactory until the late 1940s, but it really boomed between 1950 and 1970. During that period, the number of branches tripled, and the net profit, assets and foreign currency holdings more than doubled. Then through the 1970s and 1980s, Sierra experienced increasing competition from several sources. Other commercial banks and savings and loan associations were becoming more sophisticated and more aggressive in their marketing. Securities brokers such as Merrill Lynch and E.F. Hutton were expanding the financial services that they offered and were advertising excessively. Even product retailers such as Sears, Kroger, and K mart were entering the financial services field. These winds of change that were blowing through the banking business made Sierra management realizes that it had to do something if it wanted to maintain Sierras market share and growth patterns. About 2 years ago a few of Sierras top executive had income into contact with some marketing professors at a business conference. The executives were impressed by what they heard about the marketing concept. They thought that by applying the marketing concept in the bank they could better adapt to their changing environment. Consequently, they decided to introduce the marketing concept on an experimental basis in a few of the branches in the San Francisco Bay Area. Sierras main target markets were big businesses and large accounts. Not much attention was given to attracting small depositors and

investors. However, management now believed that the bank needed to change its image and outlook. The total population and personal incomes were increasing considerably in California. Sierra needed to change its attitude, approach, and distorted image if it wanted to tap into this potential market. The responsibility for these changes would placed in a marketing department, if the executives understood correctly the marketing concept as explained by the professors. The only previous activity conducted by the bank in the field of marketing had been in the area of public relations and advertising. In the late 1950s, the bank had established a separate public relations and advertising department, headed by a manager who reported on one of the top officials (the secretary). This department supplied ink blotters and book covers for students, posters which were displayed at branches, advertising cards for use on public transportation, small information folders for branch disposal, and many similar items. The common characteristic of each of these items was a message from Sierra National for instance, a message with descriptive pictures telling of the advantages of a saving account or a safety deposit box. This type of promotion may have been adequate in the beginning, but the bank soon found that it must do a lot more. This led to more intensive promotional activities such as the establishment of student tours, the sponsoring of prizes at regional fairs, student scholarships, and display booths at industrial fairs. Because banking had become more complex and competitive, the bank was outgrowing its public relations and advertising department. Charles Fleming, who came to sierra national from the marketing department of a leading consumer goods manufacturing firm, was named to head the new marketing department. He carried the title of assistant general manager of marketing, and he reported directly to Louis beam, the general manager. Beam indicated to Fleming that he (Fleming) was in complete charge of the marketing department and had full rein to implement any new marketing feature. At his first objective, the new department head planned a major reorganization designed (1) upgrade and modernize all services, (2) to handle customer service more efficiently, and (3) to listen to and act upon customers suggestions and complaints. The public relations and advertising department was placed under the new marketing department. One of the first projects to the marketing department was to redesign the banking forms, using the new bank logo and colors. The uniforms of porters, messengers, chauffeurs, and mail and

service staff were redesign to reflect the banks new image. Banking hours were to be extended for customer convenience. Fleming suggested that marketing departments be established in each of the five regional offices. After 9 months the marketing departments staff numbered 29 people. Most of the proposed projects had been initiated. The public relation and advertising department was virtually absorbed by the marketing department. Research and planning were underway to establish marketing departments in the five regions. About this time, however, problems began to arise and conflicts developed. Doubts were raised about the many and frequent changes. Many of the changes did not transpire as well as the bank had expected. Mr. Fleming, who was inexperienced in banking matters, had plunged into his job of introducing a marketing orientation into the bank. However, he received little or no cooperation or assistance from the older staff members that is, the experienced bank personnel. But some of his ideas were considered unorthodox by the banking public as well as by many of the staff, including his subordinates and his superiors. Fleming secretly admitted that he did not care what the staff thought of the new concept it was a good thing and it would be implemented. In the meantime. Fleming had clash with beam and, in the weeks that followed, Fleming was unable to patch up this relationship. This situation eventually led to Flemings dismissal from the bank. The marketing department was dissolved as an organizational unit. A new public relations and advertising department was set up to perform the marketing activities, and peter Hudson was installed as manager of this new department.

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