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Entering a new market CURRICULUM TOPICS

with a new product • Diversification

• Business Strategies
• Segmentation
• Marketing mix
Introduction
Decision-makers within organisations need to look into the future. As they do so, their
thinking should focus on their customers. These should include existing customers and
potential customers who have so far not taken up products from that organisation. In an age
when credit is more widely available than ever, this case study focuses on a new product GLOSSARY
launched by Experian, a global information solutions company which runs one of the UK's
leading credit reference agencies. Experian traditionally deals with business-to-business Business-to-business
customers. This case study illustrates how Experian has developed a new product called (b2b): transactions
CreditExpert for consumers. between two businesses.

Experian operates in more than 60 countries. It has over 20 years’ experience in providing Consumers: purchasers
financial, statistical and marketing information to businesses and consumers. Building and users of products and
partnerships with companies is Experian’s core business. For example, when banks, credit services.
card companies and other financial services organisations lend money, they need
information they can rely on. Lending money involves an element of risk. Experian’s Core business: the main
information helps them with the decisions they have to take. business activities with
which a business is
As a credit reference agency (CRA), Experian enables different lenders, such as banks, to share associated and usually
information about their customers’ credit accounts. The lender can then use this information to through which it makes
help it to decide whether somebody can afford to repay any borrowings. It looks at how much most of its money.
credit the customer already has. It also looks at how they are managing this. Lenders pay a fee
Financial services
to the CRA each time they search its records. Consumers give permission for their credit report
organisations:
information to be looked at when they apply for credit and for their account information to be
businesses like banks, credit
stored with a CRA. People have a legal right to see the information about them held by a CRA. card companies, insurance
Experian charges consumers £2, the statutory fee set by the Consumer Credit Act, to provide a companies and building
copy of the information held on a credit report (sometimes called a credit file). People receiving societies.
formal debt counselling receive their credit report free.

Diversification
As organisations develop their businesses, they face a range of choices and opportunities.
One way of representing these choices is through a matrix developed by Igor Ansoff in 1965.

Product
Market Present New

Present Market Penetration Product Development

New Market Development Diversification

By relating product opportunities to markets, this mix identifies four broad alternative
marketing strategies open to Experian:
a) Market penetration. This involves selling more of existing products to existing markets.
This increases the organisation’s market share. Experian’s is the largest credit reference
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agency in the UK market and in this field the company has two main competitors.
b) Product development. This means developing new products for existing markets.
Experian is a customer-focused organisation. Its customers are businesses. Knowledge of
individuals and markets enables Experian to build and develop a wide range of products
relevant to its customers.

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GLOSSARY
Identity fraud: the
criminal use of a stolen
identity to obtain goods or
services by deception.
Creditworthiness: a
lender’s judgement on
your capability to pay back
your debts and the
likelihood of you doing so.
Market segmentation:
a process of separating a
total market into parts so
that different strategies can
be used for different sets of
customers.
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c) Market development. This strategy takes existing products and finds new markets for
them. Experian uses market research to target and develop its markets. Operating in more
than 60 countries, Experian used this strategy to become a global leader in the
information products market.
d) Diversification. This involves moving away from core activities and developing new
products for new markets. Diversification stands apart from the other strategies. It involves
the greatest risk of all strategies. It requires new skills, new techniques and different ways
of operating. In a world where credit is part of modern living, Experian diversified with a
new product CreditExpert, launched in 2003. This decision recognised that many
consumers wanted to be more in control of their credit status, to be able to monitor their
credit report at any time and protect themselves against identity fraud.
The market
Credit for young people often starts when they take out a student loan. Credit, such as
personal loans, credit cards or hire purchase agreements, can help smooth out the peaks and
troughs of your income. It can help you buy expensive items, such as a car or kitchen
equipment, which you would otherwise have to save for. As people settle down they may want
to purchase a property. A mortgage is a type of credit that enables them to do this. It is
important that consumers manage their finances properly. They do not want a late payment,
identity fraud or clerical error to damage their financial status. This might lead to them being
refused credit in the future.
CreditExpert has enabled Experian to target a new market with a new product. Consumers
have always been able to apply for their statutory £2 credit report by post by writing to the
CRA. More recently they have been able to apply online or by phone and receive this
statutory report in the post. But by using CreditExpert consumers can access their credit report
online, once they have passed strict authentication and security checks. Consumers are wise
to monitor their credit history regularly, particularly before they apply for credit. They can
ensure that the information held about them is accurate and up-to-date and can check that
they have not been targeted by an identity fraudster.
For the first time, CreditExpert enables consumers to monitor their creditworthiness online
by giving them access to their real-time credit report. They can look at this as often as they
like. Looking at their credit report enables a consumer to know what a financial institution will
see when it does a credit check in response to an application for credit. CreditExpert also
helps its members to understand how a prospective lender is likely to view the information on
their credit reports.
Identity fraud is a serious problem in the UK. This may involve somebody applying for credit in
another person’s name. The consumer magazine Which? has revealed that more than one in
four people had been affected by identity fraud or knew somebody who had been.
CreditExpert sends its members a text or e-mail, or both, every time there is a significant
change to the information on that individual’s credit report. This enables a consumer to verify
that a record of a credit check relates to an application they have made for credit. They can
also check that any credit accounts opened belong to them and have not been opened by a
fraudster using their name and address. CreditExpert members can use a freephone number to
get help and advice about the information on their credit report. They get immediate help from
Experian’s free Victims of Fraud service if they find they have been the subject of identity fraud.
Market segmentation
Customers have different needs and wants, likes and dislikes. For example, not every person
likes the same motor car or has the same taste in clothes. There are many different types of
consumers with different types of needs. Experian aims to treat all consumers as individuals.
Market segmentation helps to turn marketing into a science. It does this by separating a
market into parts called segments. Each segment contains groups of customers who are likely to
respond in a particular way to marketing activities. Market segmentation involves three elements.
These are:
a) segmentation, in which the market is divided into segments
b) targeting, where an organisation identifies specific segments and provides products and
services relevant to those segments
c) positioning, where the strategy uses customers’ views to define the location of a product
relative to other products in the market.
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Segmentation Targeting Positioning www.thetimes100.co.uk

The marketing team at Experian wanted to identify the nature, characteristics and type of GLOSSARY
consumer who would be interested in CreditExpert. Markets are segmented in a variety of
ways. Experian used its knowledge of consumers who had applied for their statutory credit Socio-economic
reports in the past to help segmentation. It built up a profile of the consumer it wanted to grouping: a form of
target. This took into account people’s ages, where they lived, their gender and socio- segmentation where a
market is divided by the
economic grouping. Experian wanted to attract people with certain characteristics, such as
purchasing power of
people who were:
individuals.
• Internet users
• credit users
Brand: a name, symbol
• keen to manage their financial affairs well. or design used to identify a
specific product and to
These were people who might read the financial pages in daily or Sunday newspapers or visit
differentiate it from its
personal finance websites. This profiling helped marketers at Experian to identify which groups
competitors.
they would then target with information about the new CreditExpert service. Experian might be a
new name to many individuals in consumer markets. CreditExpert was a new UK brand. It was Promotional
important to develop an image that would be appropriate for the product that was being offered. campaign: a mix of
Having a profile of the most likely customer also helped Experian to develop a promotional strategies used to inform,
campaign that would position the product in the minds of its potential customers. develop and sell to a
customer base.
Marketing mix
Unique selling points:
Experian undertook its market research and identified the segments containing those potential specific benefits of a
customers that it wanted to target. Next, it developed its marketing strategy. Marketing strategies product or service that
are developed using the marketing mix. Organisations need to create a successful mix of: competitors do not or
• the right product (or service) cannot offer.
• sold at the right price
• at the right place
• using the most suitable form of promotion.

Pro
Place m oti
t
Produc on

Price

Product
The CreditExpert service enables members to check online that their credit report is accurate
and up to date. It enables them to see their credit history online as often as they want. The
CreditExpert alert service helps them to identify whether somebody has been asking for credit
using their name and address, which enables them to spot identity fraud. If there is a
problem, consumers get free phone advice from credit reference specialists. Members can
also order a credit score based on their Experian credit report, which gives them an idea of
how a lender would view the information if they were to apply for credit.

Price
As with most financial services, there is a charge. Before making a decision to use
CreditExpert, consumers can take up a free trial for a 30-day period. During this time, they
have to pay £4.99 to see a credit score. If they are happy with the service, they can use it to
help manage their credit history for £5.99 per month. If they do not think the service is for
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them, they have to remember to cancel their membership at the end of the 30-day free trial.
Credit Expert's unique selling points (USP) are that it allows consumers to see their credit
reports online and automatically alerts them to important changes to the information held about
them. This helps consumers understand what makes them creditworthy and can help them to
manage their credit commitments.

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GLOSSARY
Above the line: direct
expenditure on advertising,
such as for a TV
advertisement.
Below the line: indirect
expenditure on promotion,
such as through free gifts,
PR or competitions.
Personal selling: a
salesperson liaising with
a company to sell and
provide products and
services.
Business-to-consumer
(b2c): transactions
between a business and
consumers.
Promotional mix: a
range of different
communication methods
used to target and meet
the needs of different
segments of consumers.
Public relations:
activities involved in
communicating with
different stakeholders such
as customers, the public
The Times Newspaper Limited and ©MBA Publishing Ltd 2007. Whilst every effort has been made to ensure accuracy
and the media.
of information, neither the publisher nor the client can be held responsible for errors of omission or commission.
Sponsor: a person or
organisation that funds an
activity.
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Place
CreditExpert developed because of the growth in e-commerce communications technology.
Its ‘place’ or channel by which it reaches its users is the electronic medium of the Internet.
Experian developed CreditExpert as an e-commerce product to be available online for
consumers. There is also a free phone help-line. Once you have been verified as a member
and have online access to your credit report, you may query any of the information on your
credit report by e-mail or phone. The CreditExpert website also includes advice and tools to
help members look after their credit history and avoid identity fraud.
Promotion
There are two main categories of promotion:
• above the line
• below the line.
Above-the-line promotion includes the traditional forms of advertising such as radio and
television. Below-the-line promotion carries a one-off cost. Examples include special offers
and exhibitions. Experian has developed a range of different promotional strategies. Each of
these was designed to meet its business objectives.
Until recently, Experian worked mainly in the business-to-business (b2b) market. Its expertise
was in personal selling. To succeed in the business-to-consumer (b2c) market
Experian had to use a different promotional mix.
Over the last few years Experian has become increasingly well known to consumers thanks to its
consumer education programme (see www.experian.co.uk/learningzone), which was established in
1996. The programme uses various tools and channels to explain to people what work Experian
does, how its credit reference agency operates, what information is held on a credit report and
how consumers can see, and if necessary, amend that information. It provides free advice guides
for consumers and sponsors events like the Young Consumers of the Year competition, working
with partners like Citizens Advice and Trading Standards. The consumer education programme also
uses the media (television, radio, newspapers, magazines and the internet) to provide free
information and advice about credit and debt to consumers. It takes an exhibition stand to many
conferences and events like the Ideal Home Show and the BBC Good Homes Show.
When Experian launched its CreditExpert brand in the UK it had to build on this awareness in
order to sell a product to consumers. CreditExpert used a public relations agency to help
advertise the new online credit report with press releases and a television advertising campaign.
Experian is the official sponsor, with magazine Credit Today, of Credit Awareness Week 2007,
which aims to help consumers understand those credit issues that might confuse them.
In order to help people understand the issues surrounding identity fraud, Experian sponsored
Bennett Arron, a comedian. His identity was stolen and used by a fraudster. He now uses a
stand-up routine to tell people just what being a victim of this fraud feels like and how a
monitoring service like CreditExpert can help protect you from the effects of this crime.
Conclusion
A good understanding of the use of modern technology provided Experian with the
opportunity to innovate. Experian diversifed by building on its statutory credit report service to
develop CreditExpert, giving consumers online access to information that they had previously
only been able to access on paper. In a world where there is an increasing dependence upon
credit, Experian created its CreditExpert brand. This has provided consumers with help in
understanding and managing their credit history effectively and safely and helped them guard
against identity fraud.
Questions
1. Use an example to describe what is meant by market segmentation.
2. Explain the difference between business-to-business markets and business-to-consumer
markets.
3. What is the purpose of public relations?
4. Explain and then evaluate some of the
problems and issues associated with a
business strategy such as diversification. www.experian.co.uk