UK Market Analysis

EXECUTIVE SUMMARY:

AAA is a one on the leading mortgage firm serving the needs to individual home buyers and also to real estate professionals Customer with insufficient funds to buy property outright, to borrow money to buy home will qualify for this loan, with the present credit crunches effective most borrowers, waiting for another change in the base rate, time has aroused to give them a relief.

Home Buyers looking for a mortgage loan can find the right one for them ONLINE LENDERS, offering more current information to help customers make better-informed decisions also allowing them to qualify for the Industrial Awards Scheme, which will enable them to earn points, these points can be converted into rewards or can be converted by making payment for their Home Owners Insurance, the main area that we will be concentrating will be Middle and Low class people.

In addition we will create an Escrow account for the buyer which is for property Insurance and Taxes and pay their escrow in advance which in turn would recollect on instalments later.

This online service offers a wide range of mortgage sources differentiating loans with periodical information of loan terms and rates,

This plan gives brief information of UK Market, providing our competitor analysis and Swot analysis. Also discussing about making wiser and profitable decisions with the help of financial budget and budget of allocation of resources for each segment of marketing, the pricing structure of the product and project earning.

Sufficient Information for Making Decision:

Our bank has come up a new idea in this year, this service will enable customers to buy, retain and own property as they have the opportunity to get a fixed rate of interest, in spite of the financial situation affecting the business.

Also encouraging them to enrol them self for the Industrial Award Scheme. With this initiative our senior management believes that we can gain more popularity and earn some good profits,

SITUTATION ANALYSIS:

UK Market Analysis:

The last week has seen a flurry of fixed rate mortgages coming down in price, according to mortgage advisors John Charcol.(1)

Despite high swap rates and a static base rate, which continues to languish at 0.5 per cent for the tenth consecutive month, Chelsea, Coventry, Halifax, HSBC, Nationwide, and Yorkshire Building Society have all cut the cost of theirfixed rate mortgages.(1)

Rates wereleft unchanged again at 0.50%at the March meeting, the 12th month in a row. A Reuters poll of economists (10 Feb) predicted a rise to 0.75% in the fourth quarter (Oct to Dec 2010), and then to 1.25% in the first three months of 2011, reaching 1.75% by June. Bank rate forecasts have been on a roller coaster in the past month. (2)

Rising inflation figures -CPIrose from 1.9% to3.5% (16 Feb)in just two months - raised fears that rates may need to rise earlier than thought before to cool price pressure. Those fears have been heightened in March amid fears of a collapse in sterling. The further sterling falls, the more expensive it becomes to buy foreign goods, and effectively importing inflation - and that could force rate rises (2)

Few of the factors which has been taken into consideration

Market Size: We have made analysis of the market size by means of government data and customer surveys to estimate the market size which will help us to determine the potential sale and if we have scope to expand

Market Trends: As the market trends keeps on changing, the price sensitivity and quality emphasis are our main areas of concerns

Market Segmentation: We have created a proper market segmentation to make sure that the work assigned to these groups has people best suited for that particular job.

Market Profitability:As we are aware that the market has different levels of profitability, we have taken the average profit potential for the market to determine how difficult it might be to make profits in the market.

Distribution Channels:In the present scenario we have taken the Existing distribution channels:In case the existing channel is sufficient or not?

Trends and emerging channels:Information on new emerging channels to gain the first mover advantage

Product and Technology Analysis:

Banks

Name of Plan

Initial Fixed Rate

Until

Fees

Access

Max LTV

AAA Bank

ONLINE LENDERS

3.29%

3 years

£998

Instant

75%

B Bank

LIVE E -PROVIDERS

3.41%

01 June 2012

£991

Instant

79%

C Bank

HOME ONLINE

3.36%

01 June 2012

£995

Instant

75%

Additional Features of the Scheme

This schemes allow the customer to utilise the opportunity to qualify for the Industrial Award Scheme which will also enable them to earn points which can be converted into rewards or can also be converted to make the Home Insurance payment.

Fixed rate mortgage prices fall as confidence rises

Our prime objective is to encourage them to own a property and also reduce a little burden of the payment

Further there will be Awards given on annual basis, and they can utilise their points any time during the year.

Key Features

§ Allowing to get in-depth knowledge of the Mortgage Market

§ Reduced rate of interest and time consumption

§ Excluding the Middle Men (Brokers, Realtors)

§ Instant Access to their account

§ 24/7 Customer Support (email/chat)

§ Earning Rewards Points

Technology:

As being equipped with world class technology, the applications and the platform, with highly qualified staff, we are ready to launch this product soon; this software is being built on LIVE SUPPORT SYSTEM which will enable the customer to get updates instantly and with less margin of error.

SWOT ANALYSIS

Competitor Analysis:

In the past few years the credit crunches had shaken the economy but despite this fact the other banks are slowly capturing the market customers are still buying,

In this situation there is scope market to increase potentially and for other bank also allowing expanding the business.

How to Exploit the Opportunities:

The interest charged on two-year fixed rate mortgages fell to a six-and-a-half-year low during February in a further sign that competition was slowly returning to the market, figures showed today.

The average cost of a two-year loan dropped to 3.88% during the month, down from 3.97% in January, to stand at its lowest level since July 2003, according to the Bank of England.

There was also a fall in the average cost of a five-year fixed rate mortgage, with this dropping to 5.49% from 5.56%, while tracker rates increased slightly to 3.69%, although they remained at their second lowest level since records began in 1997.

A number of banks and building societies cut their rates during February, with many launching new best-buy deals in a bid to tempt borrowers to remortgage away from their lenders' standard variable rates.

There was also a big increase in the number of products available for people with only small deposits, as lenders became more comfortable with the risk these borrowers represented.

The number of different mortgage products available also broke through the 2,000 barrier for the first time in more than a year during the month. (4)

Given below are few opportunities that we can utilise

Ø Banks have introduced low rate helping the UK market to grow and not only this due to this the share value increases and will also lead to good economic growth and improving the UK pensions plan which will allow good saving for the Buyers.

Ø Our capital level is adequate that mean in future we would be enable us to retain more autonomy

Ø With Various Analyst projecting a growth in a large scale in the coming months, it should allow the bank to rejoin and should provide more customer confidence for people who want to take a out large scale mortgage over the coming next couple of years

How to Handle Weakness:

Ø As there are many others bank offer a reasonable rate of interest, we need to keep a track on not decreasing the rate very low, as that may lead to losses.

Ø The launch of this product will lead to affecting the moral among the staff, leading to decreased production and loyalty so we need to allow the staff to avail this promo and encourage them.

Ø Due to the current situation, and rate decreasing some existing customers might take this in a negative way, building up more frustration and leading to more defaults.

Threats

Ø Due to financial losses things have changed a lot, Investors faith in the bank have decreased which might lead to investment elsewhere.

Ø For a customer's the availability of credit is less due to lot of financial losses and the banks and investors had to bare ,and with the living cost increasing the customers are having hard time to save money

Ø Equity of many properties fell down due to loss of its value, and if the property value is less compared to the purchase price, there is less scope for the bank to compensate the loss if the borrower goes default.

Marketing Research

Required Information

It a great opportunities to middle and low level population, as there is scope for the market to grow.

Research Methodology:

Primary Resources we are planning to do a group interview and surveys and telephonic interviews directly with the customers.

Secondary Resources would be the reports and newspapers and journals we are contacting the trade associations and government agencies

Marketing Strategy

Marketing strategy marketing assassin

No of Marketing Strategies

Direct Marketing:

Involving the sales person to do the campaign directly contacting the customer and this will include negotiation and also offering according to the need of the customer.

Advertising: Advertisings the means of Radio, Television, Newspapers, and Internet, this will cover large sections of the society.

Public Relation

Developing public relations by means stake holders of the firm to build a positive perception in the minds of the public

Sales Promotions offers

Offering people with a negotiable rate of interest and also offering free gift with every registration

Sponsorship

Offering sponsorship for major events and creating awareness about the brand to the public.

Measurements of the Strategies

Our Organisation consists of customized system in place to measure performance, which can readily gauge and continuously tune its market strategy depending on the requirement.

The 2 marketing strategies that are going to follow are

General Marketing Strategy, Decision Area Strategy

Implementation

Realistic Implementation Schedules

1. Selecting the Product Link and software platform to support the service.

2. Setting up the Technology Team to work on back end to launch the website

3 Updating the software to allow the customer to register

4 Up skilling the Existing or new employees about the product and utilities

5 Training the Employees on how to handle the customers' queries and accounts.

Approximate Human Resources

Our Staff will consist of 60 members, where 50 employees will be senior and 10 will be at junior level.

The staff employed would be basically from the same locality, as the customers would be, because this will help the employee to have better understanding of the location.

Critical Path

Task Activities Duration

1 Marketing review ------------------------------------ 30 Days

2 Preview and Validate the Product -------------------- 20 Days

3 Define and Develop Selling Promotion -------------- 15 Days

4 Updating the Platform for Prelaunch ----------------- 5 Days

5 Training the Employees ----------------------------- 20 Days

6 Portfolio Management Planning ----------------- 10 Days

7 Risk Analysis ------------------------------------------- 60 Days

What If's Scenario

What If ‘scenario is to determine the effect of different cost on the profit and other financial indicators? We as a Bank are strong with capital so if the expected results are not seen and if customers have difficulty making the payments on time, we will offer them with options of Modifying the loan, or deferment of payment

Break Down of the Financial Summary

1st Year

2nd year

3rd year

Expenses

QT 1

QT 2

QT 3

QT 4

QT 1

QT 2

QT 3

QT 4

QT 1

QT 2

QT 3

QT 4

Research

150

150

150

150

180

180

180

180

180

180

180

180

MEDIA EXP

Magazines

75

75

75

75

75

75

75

75

75

75

75

75

Radio

30

30

30

30

35

35

35

35

42

42

42

42

Internet

20

20

20

20

30

30

30

30

35

35

35

35

TV

30

30

30

30

35

35

35

35

35

35

35

35

Trade show

110

110

110

110

120

120

120

120

130

130

130

130

Sponsors

250

250

250

250

280

280

280

280

325

325

325

325

Direct Mail

5

5

5

5

5

5

5

5

8

8

8

8

Tele calls

50

50

50

50

50

50

50

50

70

70

70

70

Promotions

60

60

60

60

60

60

60

60

60

60

60

60

Outdoors

120

120

120

120

130

130

130

130

140

140

140

140

Total

900

900

900

900

1000

1000

1000

1000

1100

1100

1100

1100

Operating Expenses

Expenses

200

200

200

200

200

200

200

200

230

230

230

230

Incentives

100

100

100

100

90

90

90

90

90

90

90

90

Total

300

300

300

300

290

290

290

290

90

320

320

320

Grant Total

1200

1200

1200

1200

1300

1300

1300

1300

1420

1420

1420

1420

Number of Clients

With the introduction of this product we are expecting to allocate this service to 500 customers, excluding the exciting customers and we expect to increase this number year by year.

Approximate Revenue estimates in next three years

1st Year

2nd year

3rd year

Capital Invested

1,000,000,000

2,500,000,000

3,000,000,000

Interest Income

32,900,000

82,250,000

98,700,000

Interest Expenses

6,400,000

16,000,000

19,200,000

Net Interest Income

26,500,000

66,250,000

79,500,000

Fees Income

499,000

499,000

499,000

Impairment Loan

24,000,000

60,000,000

72,000,000

Operating Expenses

1,200,000

1,300,000

1,420,000

Profit Before Tax

1,799,000

5,449,000

6,579,000

Tax

503,720

1,525,720

1,842,120

Profit After Tax

1,295,280

3,923,280

4,736,880

Control and Measurements

How would control the Product Launch

We have assigned team of professional who will planning out various activities on periodical basis and help them to enhance develop the product

Our have partnered with one the software package providers enabling us to update the software timely basis.

Measurements matrix of your estimations

There are various strategies that have been to evaluate the progress of the business, which is designed in such a way that every sector of division's progress will be taken into consideration and the overall progress will be evaluated with the plan and these strategies will be enhanced as per the requirement.

Referencing

1 http://www.fairinvestment.co.uk/fixed_rate_mortgage.aspx 2010 .Fixed rate mortgage prices falls as confidence rise (Hitting the heading article). [Online](Updated 12th Jan 2010). Available at: http://www.fairinvestment.co.uk/News/mortgage-news-Fixed-rate-mortgage-prices-fall-as-confidence-rises-18470324.html [accessed 13th March 2010].

2 http://www.thisismoney.co.uk/rates perditions 2010. when will interest rate rise? (Hitting the heading article). [Online](Updated 17th march 2010). Available at: http://www.thisismoney.co.uk/interest-rates[accessed 13th march 2010].

3 .http://www.moneysupermarket.com 2010. Compare Financial product (Hitting the heading article) [Online] (Updated 13th march 2010). Available at: http://www.moneysupermarket.com/mortgages/[accessed on 13th march 2010]

4 The Independent Business 2010. Interest on fixed rate mortgages at six year low (Hitting the heading article) [Online] (Updated 9th March 2010). Available at:http://www.independent.co.uk/news/business/news/interest-on-fixed-rate-mortgages-at-six-year-low-1918526.html [accessed 13th march 2010]

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