Banks start image repair over financial crisis In the first months of 2010, U.S.

Question

Banks start image repair over financial crisis

In the first months of 2010, U.S. Banks have launched a campaign that aims to win back trust of their consumers and repair their battered images. For banks, it is very important to rectify the violation of trust caused by the financial crisis if the financial sector is to be brought back to health. A large-scale image-improvement campaign should, therefore, convey that banks have learned from their mistakes and are taking less risk with their customers' money. The challenge facing the industry is a difficult one, however: In a poll conducted by the Gallup Organization in 2009, only 19% of Americans surveyed was confident in the integrity of banks, down from 41% 4 years earlier and the lowest level since Gallup began examining the integrity of bankers in 1976. And yet, even though banks realize that reputation improvement will be a slow, labor-intensive and cost-intensive operation, Rachel Dawes, a marketing executive of The Citizens Bank of America, points out that the financial services industry is dedicated to earning back the trust of the American people, and is engaging in a comprehensive effort to communicate directly with them. According to Rachel "it is clear that we have made mistakes and we recognize that we cannot simply advertise our way out of these issues."

Ralph Tanner, a Master student in Marketing Management is using his Master's project to investigate how U.S. banks can improve their image. He believes that understanding the current and desired image is vital to effectively repairing the battered images of banks. Therefore, Ralph wants to thoroughly understand consumers' perceptions of banks. Six weeks ago, he and his thesis supervisor have concluded that both qualitative and quantitative research is needed to develop and test a conceptual model of brand image of U.S. banks. This model should enable banks, such as The Citizens Bank of America, to gradually improve their image.

Just two weeks ago, Ralph has executed the first part of his project; an exploratory, qualitative study that aimed to identify the factors that play a role in shaping the overall image of U.S. banks. This qualitative study has resulted in a conceptual model of the image of banks in the U.S. "through the eyes of the consumer". At this moment, Ralph is working on the quantitative study. This study aims to test his conceptual model, generalize the findings of the qualitative study to the population, and eventually establish how banks can effectively improve their corporate image.

Ralph has spent the last few days on thinking about the method, sample, and procedure of his quantitative study. Because he finds that it is important to test the relationships between the variables in his conceptual model in a natural setting, Ralph has opted for a field study with minimal researcher interference. For this purpose, he has developed a questionnaire, in which consumers are asked to provide their overall perceptions toward banks and their perceptions toward six relevant factors that shape this overall image, such as diligence, competence, and reliability.

An understanding of the factors that shape overall image may help banks to improve their overall image. For instance, if banks are momentarily perceived as not very reliable, and if this factor turns out to have a significant effect on overall image, efforts in improving reliability will eventually result in a more positive overall image of banks. Ralph has decided to use an indirect method (regression analysis) to establish the effect of these contributing factors on the overall image of U.S. banks.

Ralph wants to send the questionnaire he has developed to everybody in his mail directory. This mail directory includes friends, family, members of the Golden Gate Park tennis club and the Phi Rho Omega Marketing Students association, and the staff of Da Paolo, a small Italian restaurant where Ralph has a part-time job allowing him to earn some extra cash during the weekends. His mail directory includes a total number of 254 people.

Questions

1.       Explain how sampling in qualitative research differs from sampling in quantitative

           research?

2.        Define the population of Ralph's quantitative study.

3.        Is Ralph using a sampling frame? Please explain.

4a.      According to Ralph's supervisor, the proposed sampling method is subject to

coverage error. Please explain why.

4b.      Do you think that coverage error is problematic in this case? Why and how? Is there anything that Ralph can do to solve this problem?

5.        Is Ralph putting forward a probability or a non-probability sampling technique in his quantitative study? What specific sampling technique is Ralph putting forward?

Suppose that Ralph would execute his study in the way that he has proposed. Suppose that 109 persons would return his questionnaire and that, for various reasons, 12 of these questionnaires are not useful. Furthermore, suppose that analysis of the data would reveal that 56% percent of the participants are customers of a bank that came through the crisis quite well; this particular bank has taken little risks with its customers' money and has not needed any support from the government.

6.        Do you think that Ralph's sample is large enough? Why (not)?

7.        How may the fact that 56% of the consumers is a customer of a very responsible bank affect the validity and/or reliability of the findings of Ralph's study? Is there anything that Ralph can do to solve these problems?

Explanation / Answer

As per the Chegg answering guidelines, am answering four out of seven questions in this case (4,5,6,7). Request you to post the remaining questions (1,2,3) separately on the Q&A board with the maximum of four questions per post.

(4a) According to Ralph’s supervisor, the proposed sampling method is subject to coverage error. Please explain why.

Answer: Let us first understand coverage error. This error occurs during carrying out statistical estimates for a survey. This arises due to the gap between the total population and the sampling crowd. Due to this, one can get biased results.

In this case, Ralph’s supervisor feels that the current sampling method is subject to coverage error as the total banking population is very large and Ralph will reach out to just 254 people and that too who are in his social and work circle. Hence, his supervisor feels that there will be a coverage error.

(4b) Do you think that coverage error is problematic in this case? Why and how? Is there anything that Ralph can do to solve this problem?

Answer: Coverage error will cause a problem in this case. The reason for this is when you want to understand the psyche of the entire banking population the sample size needs to cater to people who have large accounts as well as those who have smaller accounts. One needs to understand how does the bank cater to all their different types of customers. Moreover, banks provide a number of financial products and accounts so Ralph needs to tap all of these people then only will he understand the true scenario.

Ralph can try and reach out to different banks and ask for their assistance. If the people who are visiting the bank can take time out and help Ralph in filling up his questionnaire, then he can get more relevant results.

(5) Is Ralph putting forward a probability or a non-probability sampling technique in his quantitative study? What is specific sampling technique Ralph putting forward?

Answer: A probability sampling technique is one where the population gets an equal chance to be selected as a representative of the sample. Whereas, in non-probability sampling technique it is not known which individual will get a chance to be a part of the sample size.

From the above definition, we can understand that Ralph is putting forward a non – probability sampling technique as he will contact people in his own known circle.

Ralph is using a convenience sampling method where he is just reaching out to people close to him to get results for his questionnaire.     

(6) Do you think that Ralph’s sample is large enough? Why (not)?

Answer: One feels that the sample size is not large enough. If he is going to reach out to 254 respondents, then he will not cover the entire gamut of services and banks that provide banking services.

(7) How may the fact that 56% of the consumers is a customer of a very responsible bank affect the validity and/or reliability of the findings of Ralph’s study? Is there anything that Ralph can do to solve these problems?

Answer: The case study talks about the entire banking industry in the US so if Ralph’s study is throwing light on the performance of one bank, albeit responsible, it does not solve the purpose of this study. He wants to develop a model that will improve the entire banking industries image amongst the US citizens. What he can do is understand what this one bank has done and try and evaluate the other banks can do the same or not.

Since the scope of the study is so large Ralph will face problems in getting accurate results. However, he will have to make a focused approach where he covers people from different levels and who are utilizing the various services so that he can understand the issue and make a proper model which can be largely replicated by all the banks.

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