Brand management of Vietnam’s commercial banks - The case of Vietcombank

- To analyze how Vietnam’s commercial banks and Vietcombank namely have been managing their brands in reality to propose a brand management model for them.. Additionally, by reviewing ho

MINISTRY OF EDUCATION AND TRAINING

UNIVERSITY OF ECONOMICS HỒ CHÍ MINH CITY

-LÊ HUYỀN NGỌC

BRAND MANAGEMENT OF

VIETNAM’S COMMERCIAL BANKS –

THE CASE OF VIETCOMBANK

Major: Banking – Finance Major Code : 62311201

DESSERTATION SUMMARY

HỒ CHÍ MINH, 2015

The dissertation completed at:

UNIVERSITY OF ECONOMICS HỒ CHÍ MINH CITY

LIST OF PAPERS PUBLISHED

1 Brand positioning for commercial banks

2 Commercial Bank of Vietnam in the process of building corporate culture

3 Factoring - convenient banking services provided fof sales business

4 Connect the system - the solution for Vietnam card market development

5 Brand Management of Joint Stock Commercial Bank for Foreign Trade of Vietnam

6 The solution of management to increase brand value

- To analyze how Vietnam’s commercial banks and Vietcombank namely have been managing their brands in reality to propose a brand management model for them Additionally, by reviewing how this model

is applied in Vietcombank based on the management of the gap between brand identity and brand reputation, Vietcombank has determined the factors affecting it to propose the solutions to manage Vietcombank’s brand effectively

2 Research questions

- What are the activities included in commercial bank’s brand management?

- What are the factors affecting the activities of brand management?

- What are the internal factors that create the gap between brand identity and brand reputation?

- Do brand management, employees, and customers perceive factors that create Vietcombank’s brand identity and brand reputation in similar manners?

- What are the solutions that narrow the gap between brand identity and brand reputation?

- The thesis uses Ordered Choice Model method, Ordered Probit Regression, and TOBIT Regression model to determine the factors of brand positioning subjectively for brand management teams, employees, and customers There are two main reasons to use these methods:

o Firstly, Ordered Probit Regression and TOBIT consist of fewer assumptions Therefore, the estimated model is more stable than Ordinary Least Square (OLS) and other types of regression model

o Secondly, OLS’s estimation is no longer accurate since it is a linear regression and thus, the dependent variables are limited in terms of data Nonetheless, Ordered Probit Regression and TOBIT have non-linear estimations, so they can overcome the limitations of the OLS model and produce a much more accurate estimation

- The thesis uses multiple regression analysis to regress the internal factors that affect the gap between Vietcombank’s brand identity and its brand reputation according to the researched model

4 The thesis’s new contributions

Theoretical contributions:

Laying a theoretical foundation of brand management for commercial banking in Vietnam based on a different method as managing brand identity and brand reputation by the theories of brand in the service sector, emphasis on brand management focusing on the components of brand identity and brand reputation, for example: brand management teams, employees, customers through the internal and external communication means Although this method has been used in the service sector previously, it is a new approach towards brand management in commercial banking in Vietnam

The thesis builds a brand management model by narrowing the gap between brand identity, brand reputation, and other individual components, such

as the level of brand recognition of the brand management teams, employees, and customers, the level of internal and external communications to evaluate the bank’s brand management Among all the studies about bank brand management that the author has reviewed, there is no study building this type of model

Practical contributions to commercial banks’ brand management activities:

The thesis is a helpful reference for commercial banks and the banking sector regarding brand management In addition, it has proposed several solutions in these activities for Vietnamese commercial banks in general and for Vietcombank particularly

CHAPTER 1: BASIC KNOWLEDGE ABOUT BRAND MANAGEMENT

OF COMMERCIAL BANKS 1.1 The definition of brand

Most of experts have the same general understanding in terms of brand’s

definition defining brand as a product, service, person or place - which

probably is identical to other products, services, people or places –which is added more value in case of the buyers or users realizing some unique value when it satisfies their needs the best Moreover, this successful result also considers the fact that these added values are maintained against competitors

1.2 The roles of brand

1.2.1 The role of brands for companies

A strong brand helps the company ensure the future income, gain the ability to create added value as the barriers for potential competitors to enter the market, and facilitate brand extension to other new markets (Kapferer, 1997)

The roles of brand: represent company’s communication means, benefit the company since well-known brand names are often chosen over less well-known ones, bring a sense of pride to the employees being a member of a popular company (Berry, 2000), motivate employees to have more enthusiasm and dedicate more knowledge to implement company’s goals

1.2.2 The role of brands for customers

Brand helps customer identify the company more easily and reduce the cost of searching (Aaker, 1991); boost customers’ confidence in orientation, shopping options, and risk reduction; help them express their images and give them the symbolic value in accordance with what they desire; help to strengthen their confidence in purchasing decision, thereby create customers’ satisfaction

1.3 Brands in banking

1.3.1 Definition

A brand of a bank can be understood as a term used in marketing, which

is a transaction name of a bank and is associated with its own identity and reputation The image of the subject entitled can leave a deep mark and distinguish it from other banks in currency trading activities, credits and loans providing, and banking services

1.3.2 The roles of a bank’s brand

The roles of a bank’s brand are the same as the ones of a company’s brand that are mentioned above In addition, it has some other special roles due

to specific activities as the follows:

- Increasing the size of deposit mobilization

- Reducing the operational risk, such as: risk asset, liquidity risk, and management risk

- Increasing the ability to attract investments

1.4 Brand management in Commercial bank

1.4.1 Definition

According to Kapferer (2008), brand management is the management of developing the brand step by step, starting from describing the vision of the brand, identifying its core values, creating brand personality, defining the strategic interests and brand’s attributes, creating the unity, and ultimately creating the product

Commercial bank’ brand management can be defined briefly as the follows: Brand management of a commercial bank is the process of maintaining, improving, and promoting the bank’s brand It focuses directly on the brand and how to create an absolute brand reputation in customers’ minds Proper brand management can increase sales and facilitate market expansion

1.4.2 Brand management’s activities

Brand management’s activities include: building brand identity, developing brand reputation, and protecting the brand

Building brand identity is the establishment of its components, such as the vision, culture, position, personalities, and the relationship between brand and its expression

Building brand reputation: the reputation of the brand generally is more stable and more condense over the time compared to the brand’s image It is the sense of evaluation from customers, business partners, and public opinions towards the brand If brand identity and reputation are the same, the brand is at its peak and the corporation is managing it perfectly

Brand protection includes two parts: first of all is the protection of the brand and its components; second of all is the establishment of the barriers preventing the possibilities of attacks from the competitors

1.5 The factors affecting the gap between brand’s identity and

brand’s reputation

1.5.1 Brand management teams

A brand management teams includes senior and middle managers of the company and the employees of brand management department The mission of the teams is developing and implementing the brand strategy, managing both brand identity and brand reputation so that the gap between them is as small as possible

1.5.2 Employees

Employees are the representative of the company in front of the customers and they play an important role in the transmission of the brand’s actual value to the customers Staffs having a bad awareness about the brand will lead to them behaving reluctantly and listlessly or understanding incorrectly the ideas of brand identity Therefore, the people who have contacts with them will eventually develop the wrong images about the brand This incident creates the gap between brand identity and brand reputation

1.5.3 Customers

Customers must be the center of the brand strategy

Customers understanding about the brand usually starts from a variety of sources: from their networks, advertisements, and referrals However, the most important one is the interaction between employees and customers The clearer the level of customers’ understanding is, the higher the company’s chance to sell its products is How customers view the brand is the bank’s reputation

1.5.4 Brand communication

Within the scope of this study, general communication is addressed, but the effects of two communication objects, which are the internal and external communication, on the management of the gap between brand identity and brand reputation are studied

1.6 Brand management models

The brand management models that the author refers to include: The Management Iceberg Model, Brand identity management model of Balmer and Stotvig (1997), and the “Brand management through narrowing the gap between brand’s identity and brand’s reputation” model of Chernatony (1999) Among them, Chernatony’s model was drawn from the previous studies on building brand identity The cores of this model are the brand vision and culture which will encourage corporation to develop its positioning and culture Shaping the relationship within the firm are three factors, which will express the brand identity

Chernatony’s model provides a useful brand management method, which

is the effectiveness of demonstrating clearly the important factors related to branding However, the proposed model has no specific implementation plan It has to be applied in practice to be further improved It requires managers to check the consistency of all the aspects of the business to narrow the gap between brand identity and brand reputation when managing the brand

The model which the author studies and proposes is based on Chernatony’s model

1.7 Conceptual model

1.8 Conclusion

In chapter 1, the thesis has generalized the concepts of, the roles of, and the method to manage brands It has presented some models of brand management that were based on the brand identity and brand reputation Thus, it has stated the components related to the brand management, such as brand identity, brand reputation, brand management staffs, employees, customers, and communication means Additionally, the thesis has determined that brand management is to narrowing the gap between brand identity (internal) and brand reputation (external customers’ evaluation)

Brand management staffs’

level of brand identity

CHAPTER 2:THE REALITY OF BRAND MANAGEMENT IN VIETNAMESE COMMERCIAL BANKS AND VIETCOMBANK

2.1 Brand management in Vietnamese commercial banks

2.1.1 The development of Vietnamese commercial banks since 1975 2.1.2 The brand management activities

2.1.2.1 Brand identity

Positioning of the bank’s brand

Vietnamese’s commercial banking system has a great advantage as the familiar names with customers for a long time, especially the government-owned or government-controlled ones Besides increasing the scale of capital, expanding the services, the banks are also interested in creating a brand for themselves, such as changing the name and logo, defining the mission, goals, and brand identity… However, so far, bank’s brand management activities are still spontaneous and informal and not conducted regularly and continuously Obviously, the banks do not only focus on the brand appearance, such as logo, slogan, name, and offices, but also pay attention on competing fiercely regarding in quality improvement and products and services diversification Retail banking, utilities services, and leading banking are the titles and the purposes which Vietnamese banks are targeting

The culture of the bank’s brand

Currently, the commercial banks have been more interested in corporate culture and ways to establish it in many forms with different mottos In recent years, the banking system has had many banks which positively change and actively build their corporate culture, such as Vietcombank, Vietinbank, Agribank, BIDV, Vietnam bank for Social Policies, Mekong Housing Bank, and Central People’s Credit Fund

However, these changes are merely spoken about as ideal objectives banks are trying to reach, and never put into specific plans of actions Certainty,

no Vietnamese bank currently has its own different culture and identity All of the banks talk about corporate culture, but they have not formally built clear and specific strategies to strengthen their culture as an essential part of the brand development strategy Additionally, there are some cases in which the plan is implemented asynchronously and arbitrary when the upper managers deploy very well but the employees are not trained to be aware of the importance of the issues

2.1.2.2 The bank’s reputation

Currently, customers’ trust in the banking system is severely diminished after the case of Vietinbank’s Huyen Nhu and several heads of Agribank’s, ACB’s, Trustbank’s branches violating the laws The reputation of the Vietnamese banking system is dramatically damaged and “diminished” both

domestically and internationally, hindering the prospect of making profits In terms of branding, the Vietnamese commercial banks’ public image is no longer positive in customers’ opinions The image advertising through internal and external communication means are done reluctantly and sporadically

A study published in the Branding for the Financial and Banking Sector conference which was held in Hanoi in 2009 showed that Vietnamese banks does not buy, research about, or use the data studied about the market, their communication strategies, branding, and brand development There are many banks which finance several entertainment programs for advertising, but they do not identify the specific purposes or the suitable types Communication activities are done ineffectively, discontinuously, and spontaneously, so they are not remarkable Internal communication means must build and propagate about working ethics, workplace culture, corporate culture of the bank to its employees and the society as well Additionally, that is an opportunity to introduce and advertises brand to the public Until now, the banks have not done these activities mentioned above effectively and the damages due to employees’ violations of professional ethics are the evidences of the banks’ loose management and failed employees’ trainings

Groups of visible values are the external signs of brand identity, which are also the brand reputation However, they are not only expressed through the images of the employees, but also expressed through the business entities, such

as the system of internal processes, the offices’ architecture, signs, name, slogan, the employees’ uniforms, and the language used These are the external expressions of the bank’s culture Customers will have positive perceptions and

a better first impression with the corporation if its office looks nicely

About the offices: for the bank, office buildings are the important factors The headquarters and the branches must be in convenient and secure places that create a reliable atmosphere Except for the Agribank, all of the other banks choose the prime locations of the city to do businesses However, the building is not really spacious and there is no uniformity in the employees’ attires, for example: Vietcombank, Vietinbank, and BIDV

2.1.2.3 Brand Protection

In terms of brand protection, Vietinbank is the only bank which registered its international trademark rights The Vietinbank brand is protected in Vietnam and over 50 countries around the world (Dan Tri news, 17/03/2014)

On 6/7/2005, BIDV was granted the registered trademarks certification in the US, which would last for 10 years, by the USA Patent Registration

In addition, Vietcombank has also registered its trademark protection domestically and internationally, but the communication did not publicly announce this event The bank’s employees also do not know about this information

2.2 Brand Management in Vietcombank

2.2.1 Vietcombank’s brand identity

Vietcombank has been trying to build a different brand identity and aiming to become the leading bank in Vietnam in 2030 for years Thereby, Vietcombank issues a statement about five basic core values such as reliability, standards, innovation, stability, and empathy

These claims are very good, but they are discrete, lengthy, and forgettable, and thus, it is difficult to convey all the meanings to the employees and customers

In the beginning of 2013, Vietcombank announced a new brand identity recognition system with complete changes in signs, logo, slogan, furniture of the offices, employees’ uniforms, and print publications In a period of 25 years, Vietcombank has had a total of three times changing the brand identity In 2010, the bank published a handbook about its culture including some factors, such as vision, mission, and standards of behaviors, with the purpose of building its corporate culture and brand identity, which is Vietcombank brand culture

The values that Vietcombank is aiming are:

- Mission: the leading bank for Vietnam’s prosperity

- Vision: to become a diversified financial group on par with other powerful financial corporations in the region by 2030

- The image of the bank: green and prosperous, reliable and modern, friendly and sharing Vietcombank

2.2.2 Internal communication means and training

In terms of internal training, each employee is educated about Vietcombank’s culture which includes five core values The branches has organized activities, such as contests that helps employees to learn more about its culture, to explain more about the values to the staffs Enhancing professional training and customer services training are done Especially, they also focus on training the new employees by organizing the courses specifically for them Additionally, the “Handbook of Vietcombank’s culture” is used to standardize the standards of employee’s conducts when working and communicating with customers Thereby, the bank has organized many competitions, such as “Vietcombank’s Smiles”, “The effective and polite Transaction office”, and “Excellent Bank Teller”, to standardize the communication skills and customer service skills while honoring the outstanding tellers and the high-quality transaction offices, and issuing the evaluation criteria for employees and offices Unfortunately, these activities are not implemented usually and are not widely advertised, so they do not create a well-known reputation Therefore, that creates a lack of uniformity in the authentication and actions of all the employees as well as the brand management teams

The internal communication in Vietcombank has been limited and not been focused: the communication activities have not been consistent and synchronized from the headquarters to all the branches since they are only done

in some big branches The teams working on public relation are still limited in