BLUE OCEAN STRATEGY CHAPTER 5: REACH BEYOND EXISTING DEMAND Team 5 Micah Decuire, Kendra Kimberlin, Dylan Blase, Skylar Bogle and Daniel Uribe

Whole Foods’ Strategy for Luring Millennials: Be a “Super Cool Hang” Reaching into untapped markets by appealing to their interests Tattoo shops, “hipster-y florists”, vegan restaurants, pet shops, barbershops, etc. Offering products within their feasibility range Staying true to their values and standards Create an atmosphere where people want to stay and spend time Offer more variety in products and services

Three Non-Customer Tiers Third Tier: “Unexplored” Non-Customer Furthest away from market Second Tier: “Refusing” Non Customer who consciously choose against your market First Tier: “Soon-to-Be” Customers closest to your market

First Tier Non-Customers Pret A Manager fast casual Buy products out of necessity Will leave industry if given alternative One cause of stagnation within a market Noticed professionals were opting to not eat in restaurant Speed, price, and quality matter

Second Tier Non-Customers JCDecaux sports retailer Refuse to use current market offerings Offerings are unacceptable Offerings are outside of customers means Adapted outdoor advertising Was able to attract customers from transit/central areas

Third Tier Non-Customers US Defense Aerospace Never considered industry offerings Unexplored customers May not be targeted Gathered commonalities to create a plane that catered to every need Considered most important characteristics of a plane Found a way to build one plane to take care of all needs

GENERAL BANKING SERVICES & PERKS Types of accounts: Savings, Checking, Money market, & Certificate of Deposit Accounts Types of lending: Mortgage, Auto, Business, Student, & Personal Loans Additional Perks can include: Credit cards, ATM, Online banking, International banking, account opening incentives, rewards for referrals, notary services, credit score monitoring & identity theft notification

There are several strengths that set Wells Fargo apart from their competitors: Cross-Selling Low Funding costs Strong Net Interest margins Then there are things that Wells Fargo needs to work on… Technology International Banking Containing Risks Human Resources http://marketrealist.com/2014/10/why-low-funding-cost-an-advantage-for-wells-fargo/

CROSS-SELLING Wells Fargo is the bank that’s most successful at cross-selling. None of its competitors—JP Morgan (JPM), Bank of America (BAC), or Citibank (C)—even come close to it. In order for Wells Fargo to do this they sit down and figure out exactly what the customer needs and potentially could want in the future. This allows customers to see the benefits of other products and increases loyalty which translates to personal marketers for Wells Fargo. Cross selling is important for three main reasons: It’s cheaper than new customer acquisition: It costs a bank much more to acquire customers than to sell to an existing customer. It improves customer retention: Cross-selling means a customer gets a number of services from you. This leads to a longer and deeper customer relationship. It increases revenue per customer: More cross-selling means more revenue from the same customer.

LOW FUNDING COSTS The cost of deposits is an important cost for the bank. If a bank is able to keep its cost of deposits low, it will have a competitive advantage.

STRONG NET INTEREST MARGINS The net interest margin is the difference between interest income generated by loans and interest paid on deposits divided by their total assets. A high net interest margin is very important for banks. It’s important for two main reasons. High net interest margins indicate that a bank is able to earn more profits on the loan it gives. High net interest margins help a bank have a higher level of cushion on a loan. If the economic cycle turns decreases and insolvency increases in the future, higher net interest helps banks absorb a higher degree of shocks

Top 3 Competitors: JPMorgan Chase & Co Top 3 Competitors: JPMorgan Chase & Co., Bank of America Corp, Citigroup Inc.

J.P Morgan Chase Strengths: Weaknesses: Attracting Non-Customers Strong brand name Global presence that employs over 250,000 people Good brand visibility in the Business-2-Business segments Largest bank in the US in terms sales, market value, assets and profits Weaknesses: Stiff competition from other financial institutions Attracting Non-Customers Offering Global banking with services such as: Foreign exchange, Multinational banking, Global Trade Offering different types of accounts targets to 13-24 year olds Advancements in banks services: EMV Card and partner with Apple & Google Wallet

Bank of America Strengths Weaknesses Attracting Non-Customers Strong Brand Name Largest Financial holding based company in all of the United States. Good financial position Bank of America serves clients in more than 150 countries and has a relationship with 99% of the U.S fortune 500 companies Weaknesses Net interest is declining Asset quality declining Stock is declining Attracting Non-Customers Paired with Apple Pay Strong Brand name attracts customers

Citigroup Inc Strengths: Weaknesses: Attracting Non-Customers Employs 265,000+ employees 4th largest world bank with $906B in total deposits and $1.73T in total assets 200 million customers in 140 countries Citi Branded Cards is one of the world’s largest credit card issuers Systemically important financial institution (Too Big To Fail business model) Serves ~85% of the world’s fortune 500 companies for Treasury and Trade Solutions (TTS) Weaknesses: Involved in numerous scandals, not trusted by the public Attracting Non-Customers One of the largest providers of consumer and commercial credit card products, services, and retail solutions Treasury and Trade Solutions (TTS) dept provides cash management, trade and securities services to companies, governments, and other institutions.