International Marketing Assignment: Business Expansion of Monzo Banking Ltd. in Algeria

Question

Task: You will be required to choose a country and an SME before proceeding with the international marketing assignment. You then required to conduct a business environment audit of that country for expansion. You should conduct a PESTLE analysis for your allocated country, describe and evaluate those aspects of the environment (political, legal, economic, socio-cultural, technological, and environmental) in the potential global market that are relevant to and, have implications for, developing a marketing strategy. The purpose of this evaluation is to identify potential market opportunities for the introduction of your allocated product/service. You will then be required to develop or select the allocated company’s product/service to show how it can be developed in your country based on your PESTLE evaluation. You will then develop a global marketing strategy to that country for your product/service. This will include (although not exclusively):

• Justifying the opportunity in the country for the product/service you will develop.
• Provide an overview of the competitive landscape for the offering you are developing in your allocated country.
• Develop and design an outline international marketing strategy. You will need to discuss the product and modifications (if any) to allow entry and market establishment, pricing decisions, effective promotional efforts to establish awareness and establish market presence, distribution choices and brand/name along with suggesting the key challenges to global expansion for the SME in this market.
• You will be required to ensure that the PESTLE and international marketing strategy are linked to justify your decisions and choices.

Answer

1. Introduction:
The assessment discussed the way the selected SME “Monzo Bank Ltd.” will expand their business in “Algeria”. In the first section, it analysed the entire overview of Monzo, an Online Bank Based Organisation including the “services offered by the company”, “Operated spaces of the country”, “Annual revenue” etc. In the second section, it conducted a business environment audit of Algeria for expansion of the business “Monzo” by using PESTLE Analysis. The third section of the assignment identified marketing objectives for the expansion of the business. It discussed the rationale for marketing objectives along with the proper justification. The fourth section identified the marketing strategy for Monzo by identifying the potential opportunities and attractiveness of Algeria. It also discussed the competitive strength of the country. It also identified a mode of entry for the company to expand their business in Algeria (a Country in North Africa). It also identified appropriate customer segments for the company by using STP analysis. The next section discussed the 4ps of marketing mix strategy for the successful expansion of the company. It also developed a Marketing action plan for Monzo for the global expansion of the company.

2. Company Overview:
Monzo Bank Ltd. is an online bank organisation. The company is mainly based in the United Kingdom. It is one of the earliest new app-based Challenger banks in the United Kingdom. The organisation aims to “Solve people problems, treating people fairly and operating the banking operations transparently and making the banking operation better for everyone. Currently, 5.70 million people use the Monzo Banking services and its hot coral cards to manage money and spend money around the world (Monzo.com. 2021-a). Currently, 5000000 customers use Monzo Bank Ltd. Word of mouth marketing helps the company to grow. The organic growth of the company is now 92% and the inorganic growth of the company is 8% (Refer to Appendix 1). The deposits scheme in the Monzo is £3.1bn (FY2021) that is increased by 124% compared to FY2020 (Monzo.com. 2021-a) (Refer to Appendix 2). The annual run rate revenue of the company is now more than £105 million according to the report of December 2020 (Refer to Appendix 3). The company is recommended as 2nd most recommended brand in the UK. The Net operating income growth is increased by 74% from £35.7 million (2020) to £62.2 million in 2021. The new products of the company are Monzo Premium, Monzo Plus and Monzo Business. The company gained 25% of their annual revenue from new products (Monzo.com. 2021-a).

3. Situation Analysis:
3.1 Macro Environment Analysis (PESTLE Analysis)
PESTLE Analysis of Algeria:
It highlighted the key challenges and opportunities to the global expansion for Monzo in Algerian Market.
Political Factor:
The political framework of Algeria maintains a constitutional semi-presidential republic framework. The risk of political instability has been now growing in Algeria since 2019. Bungled leadership and political uncertainty deteriorated the entire political health of the country. These are the threats for Monzo to expand their business in the market. Moreover, human rights issues, bribery, terrorism, organised and intellectual property crime and corruption are the barriers for any new business (Council on Foreign Relations. 2021). However, outside of the hydrocarbon industry, there are having many opportunities for financial services. Bureaucratic political culture can slower and make the decision-making process complex for Monzo. The Bilateral relationship between Algeria and UK is the opportunity for any new business to expanding their business in Algeria.

Economic Factor:
Tighter economic circumstances of Algeria have hindered the ability of the country to provide proper services to new businesses and their country people.

Fig 1: Inflation rate in Algeria
Source: (Macrotrends.net. 2021-a)

The inflation rate of Algeria was 2.42% in 2020, a 0.46% increase from the inflation rate of 2019 (Macrotrends.net. 2021-a). An increase in inflation and concomitant tax rates increases the cost of living in Algeria. It reduces the ability of people to meet their daily needs. It increases the situation of protests by country people throughout the entire country for basic services like electricity, education, housing, health care, pensions, water supply etc. (worldbank.org 2021).

Fig 2: GDP Growth rate in Algeria
Source: (Macrotrends.net. 2021-b)

Moreover, the GDP growth rate of Algeria was -5.48% in 2020, a 6.28% decline in GDP rate from 2019(Macrotrends.net. 2021-b)

Fig 3: Economic growth in Algeria
Source: (Macrotrends.net. 2021-c)

The economic growth rate was $145.16 billion in 2020 that is declined by 15.19% from 2019 (Macrotrends.net. 2021-c). Moreover, the Covid-19 pandemic situation increases the economic crisis across the entire country. It declines the real income of people, increases the unemployment rate and reduced the production ability of the organisations of Algeria (Icaew.com. 2021). These are threats for new company Monzo to expand their business in the Algerian Market. However, the GDP rate of Algeria is expected to grow by 3.7% in 2021 and 2.5% in the year 2022 that would help Algeria to recover their economic crisis situation. It is an opportunity for financial services organisations like Monzo.

Social factor:

Fig 4: Poverty rate in Algeria
Source: (Statista. 2021-a)

The current pandemic situation also changes the social norms and behaviour of the people. It influences the majority number of people to meet their daily needs including banking and financial services online. The Government also imposes several social distance guidelines to avoid physical interactions to reduce the spread of Covid-19. It is the greatest opportunity for Monzo to expand their business during this pandemic situation to grab the attention of the Algerian Customers. However, due to the pandemic situation, the poverty rate is 4.2% in 2021 that is 0.2% more than in 2020 (Statista. 2021-a). It reduces the capability of people to do invest in banking and other financial services. It also reduces savings facilities due to lower income rates (GOV.UK. 2021).

Fig 5: Literacy rate in Algeria
Source: (Statista. 2021-b)

It can be a threat for Monzo Banking Ltd. while expanding their business in Algerian Market. However, the high literacy rate (81%) can be an opportunity for Monzo (Statista. 2021-b). It can help the company to easily select skilled and knowledgeable employees for operating their business ethically and smoothly in Algerian Market.

Technological Factor:
Algerian people are increasingly tech-savvy. The Algerian Government also now focuses on modernization and the digitalisation of the processes. It is the opportunity for Monzo Banking Ltd. to grab the attention of the Algerians by offering them premium banking and financial services through online mediums (International Trade Administration | Trade.gov. 2021). Monzo can influence Algerian consumers by offering them transparent and fair banking services. It is an opportunity for Monzo. However, after having the 4X security shield, over dependant on Internet banking services can increase the risk of unauthorised accesses and payment stuck issues (Refer to Appendix 4). The excellent banking facility for small business sectors to manage their finances, improve the visibility of their services and keep tracking their activities through FreeAgent, Xero and QuickBooks like accounting tools can be the opportunity for Monzo to increase the demand for their services among Algerians (Monzo.com. 2021-b). During this pandemic situation, it can bring huge benefits for Monzo by supporting small businesses to easily operate their business activity.

Environmental factor:
Algerian Government places huge initiative by developing national climate change adaption plan to reduce the environmental impact from different industries. However, Monzo is also a socially responsible organisation that is an opportunity for Monzo banking Ltd. for being a part of the environmental acts and climate change plan of Algeria (Icaew.com. 2021). It would bring a huge opportunity for Monzo to get potential support from the Algerian Government.

Legal Factor:
Monzo banking Ltd. is also an ethically responsible financial organisation. The organisation maintains an equitable and high performing workplace environment for their employees to meet the employees’ needs (Monzo.com. 2021-c). The organisation also maintains all human rights standards to meet all the needs of customers. It will help Monzo to meet the standard of the customer rights Act, Human rights act, and employee protection Act. It is the biggest opportunity for the company to expand their business in Algerian Market.

4. Marketing Objectives:
4.1Rationale for Objectives:
Following are the main marketing objectives of Monzo Banking Ltd. for expanding their business:
1. To promote their banking services by focusing on the social media platform and word-of-mouth advertising within 3 Months.
Monzo banking Ltd. aims to promote its banking services through social media platforms and also share the link for downloading the app to influence the Algerian people. The organisation aims to share the services offered by the bank and the video of how the people experience their services (Monzo.com. 2021-a). The company will also share the feedback of UK people regarding their experience to promote their banking services.

2. To build a loyal customer base of 1 million people within 1 year by offering the excellent digital experience of banking services.
Monzo Banking Ltd. aims to offer seamless digital banking services to Algerian people to increase the loyal customer base for the organisation. The main purpose of the company is to provide transparent and secure digital banking services to people, support small businesses to manage their finances fearlessly etc.

3. To increase the sales of digital banking services in the Algerian Market within 6 Months.
The main aim of Monzo Banking Ltd. is to expand their business into the Algerian Market to increase the sales of their financial services and new products such as Monzo plus, Monzo premium, and Monzo Business (Monzo.com. 2021-a). The company aims to make banking services affordable for each and every people. It will help the company to increase their sales of the services in the Algerian Market.

4.2 Justification:
Based on the SMART Goals Framework, each marketing objective of Monzo Banking Ltd. is Specific, Measurable, Achievable, Relevant and Time-bound. Based on the first objective of Monzo, the company aims to promote their banking services through the social media platform and word-of-mouth marketing advertising facility. Monzo already has a strong digital presence in the United Kingdom. According to this perspective, it is achievable and measurable. The strong digital presence, 4X security shield of the financial banking services and strong brand reputation of Monzo in the UK would help the Company to promote their banking services and increase the word-of-mouth advertising services within 3 Months. It defined that the goal is specific, realistic and time-bound. Based on the second objective of Monzo, the company aims to build a loyal customer base of 1 million people within 1 year in Algerian Market. Monzo provides an excellent digital banking experience to each and every people in the UK. Monzo is also the 2nd most recommended bank brand in the UK. It is the strength of the company to expand its business in the Algerian Market. The excellent brand reputation, the strong customer base of 5 million people in the UK and strong word of mouth marketing base of Monzo will help the company to enter into the market with a proper brand reputation. It defined that the goal is realistic, measurable and achievable. It will help the company to build a customer base of 1 million people within the time-bound of 1 year. It defined that the goal is specific and time-bound. Based on the third objective of Monzo, the above-identified two objectives will help the company to build a strong brand reputation in Algerian Market. It will help the company to increase the sale of their financial services and new products in the Algerian Market within six months. It defined that the goal is achievable, specific, time-bound, realistic and measurable.

5. Marketing Strategy:
5.1 Portfolio Analysis:
5.1.1 The Attractiveness of Allocated Country:
Industry Attractiveness in Algeria:
Porter’s Five Forces Analysis:
Threats of Competitors:
In this modern edge, the majority numbers of banks introduce their online banking services through internet banking and mobile banking services. They also provide all types of banking services like depositing money, transferring money, withdrawing money, opening fixed deposits and recurring deposits account, applying for a loan through online, getting monthly and yearly statement of bank transactions etc.(Monzo.com. 2021-c). It can create high force while starting their business in Algerian Market.

Power of Suppliers:
It can create a moderate force on Monzo. Algeria is the fourth largest economic country in Africa. The strong presence of profit organisations, hydrocarbon, natural gas and oil industry and other profitable industry, charities and banking organisation is the main strength of Algerian Market (MENNA and MEHIBEL, 2017). It would help Monzo to expand their business more rapidly by developing the partnership with these organisations.

Power of Buyers:
The current population of Algeria is 4.39 crores (Datacommons.org. 2021). The majority number of people are tech-savvy in Algeria. Moreover, the huge presence of banking institutions can increase the switching cost of customers. It can create a moderate force on Monzo expansion of their business in the Algerian Market. However, Monzo can create a strong brand reputation by offering their totally digital banking services to avoid the large queue, follow social distancing rules and large waiting time for executing the banking-related activities (Monzo.com. 2021-b).

Threat of Substitution:
The threat of illegal and unethical activities by perpetrators, spam messages and links by hackers and other illegal offers by perpetrators and fraud banking transactions can damage the brand reputation of Monzo. It can create a high force on Monzo while operating their business in Algeria. It can also damage the relationship between customers and Company. It can also decline the sale of their services in the Algerian Market.

Threat of New Entrants:
After having a strong brand reputation, new entrants in Algerian Market can create a moderate force on Monzo. However, the strong digital presence, full digital banking facilities and Monzo plus and premium services are the main strength of Monzo that can reduce the threat of new entrants.

SWOT Analysis of Algeria:
Based on the outcome of the PESTLE and Porter’s Five Forces Analysis, this section identified the attractiveness of the market in the respect of strength, weaknesses, Opportunities and Threats of the Algerian Market by using the SWOT Framework. It also highlighted the key challenges to the global expansion for Monzo in Algerian Market.

5.1.2 Competitive Strength of Selected Company:

Based on the outcome of the VRIO Analysis, it defined Monzo Banking Ltd. has positioned itself in a sustained competitive position. The SME organisation mainly focuses on solving the problems rather than selling other financial products. The organisation also participates in social care programs (Isac, 2019). The mission of the company is to make the money work for each and every people. The company also focuses on making a low environmental footprint. The organisation is branchless and digital. The company don’t invest in fossil fuel-based energy companies. They contribute to global climate change. The company also worked with the money and mental health policy institute to improve the company’s accessibility for customers with serious mental health problems (Sammour and Chen, 2019). Monzo Bank Ltd. is an ethical and socially responsible company. It defines that in the respect of sustainability and social responsibility perspective, the activities and initiatives followed by Monzo are Valuable, rare and organised and somehow challengeable to imitate. The company built an innovative way to support people to help them understand and control their own finances. The company holds higher standards of ethical behaviour by creating a safe working environment for everyone and making the world a better place to live. The company also offers higher customer care services by responding to their feedback and doubts instantly. It defines that customer care service offered by the company is valuable, rare, hard to imitable and organised. The organisation also launched new features to provide gambling protections to each and every people by offering the friction-based banking tool. The organisation can increase the demand for their services by offering them Monzo Premium (Banking services that makes a bank statement), Monzo plus (To help people to put money into their hands), facility of paying the direct debits through Monzo banking services, borrow facility, paying the travel fees through Monzo Master cards and excellent 4X secure bank services through the Monzo app. In the respect of innovation and creativity as well as security and safety, services offered by Monzo are valuable, hard to imitable, organised and rare (Monzo.com. 2021-c). It defines that the core values of the company are also valuable, organised and rare that would help in increasing the brand reputation after expanding their business in the Algerian market.

5.1.3 Mode of entry:
Joint venture market entry mode is the most suitable market entry mode for Monzo to expand their business in Algerian Market. It will help Monzo to take the advantage of marketing presence and customer base of partner financial institutions or banking organisations, its brand reputation and local knowledge regarding social norms, attitudes and behaviour of Algerian people (Sestu and Majocchi, 2020). It will help Monzo to easily understand the market and needs of target customers. It will help the company to develop appropriate strategies in respect to market analysis and customers’ needs to easily grab the attention of their target customers. It would help Monzo to achieve their marketing objectives according to their expectation.

5.1.4. Segmentation, targeting and positioning
Segmentation:
Demographic Segmentation:
15 to 60 years old people, minimum qualified, high, medium and lower incoming background people, male, female and others, etc.

Geographic Segmentation:
People belong to Algeria and other international markets.
Psychographic segmentation:
Tech-savvy, preferred to manage and control their finances through online banking, preferred to use digital payment services, preferred to use a digital credit card, debit card and other services instead of physical banking, etc.

Behavioural Segmentation:
People who are preferred to utilise seasonal payment offers, preferred to utilise coupons and other discount facilities, preferred to get instant customer care services to solve their banking problems etc.

Targeting:
People aged between 15 to 60 years old, tech-savvy people, people who are preferred to use online digital banking services to meet their daily needs like travelling, shopping, borrowing money, getting instant services from the bank across Algeria are the main target customers of Monzo.

Positioning:
Based on the overall analysis of the market and its attractiveness, Monzo needs to use the differentiation strategy while operating their business in Algerian Market. The company needs to maintain their transparent and loyal banking facility for making a positive brand reputation in the market (Islamiet al., 2020). They can also promote their services through social media platforms to engage more customers in the company. The company needs to develop a partnership with non-profit organisations, other organisations and charities to support the social campaigns to protect the environment and promote financial inclusion (Balkan, 2021). It will help the company to position itself in a competitive position.

6. Marketing Tactics:
This section used a 4p’s marketing mix strategy for global expansion of the business.

6.1 Product:
The company needs to maintain transparent and fair banking services, environment-friendly activities and socially responsible initiatives while offering its digital banking services. Moreover, Monzo needs to improve their excellent block gambling transaction facilities to avoid illegal money transactions to increase the demand for their services among Algerian people.

6.2 Price:
The Company needs to focus on meeting the customers’ needs. Monzo should focus on following its mission to make the Monzo app accessible for everyone. The company needs to invest in the deposits of customers ethically and safely. Monzo purpose is to do not engage in any artificial tax planning. Monzo needs to use affordable pricing strategy to sale their products and financial services to target customers in Algerian market. Monzo needs to follow their core values and mission appropriately to easily grab the attention of the Algerian people. Monzo is required to remove the invisible barriers to enter into the new market such as hidden fees, confusing and difficult language and inaccessible products. It will help the company to easily develop a strong and trustworthy relationship with Algerian people.

6.3 Place:
Monzo Banking Ltd. is a totally digital banking service for customers. It is required to make the Monzo app available and adaptable for any devices that will help Algerian people to access the app and their banking services through Mobile, tablet and laptop (Monzo.com. 2021-c). It is the responsibility of the company should do a Joint venture partnership with any banking organisation or financial institution to grab the market of the partner and start to deliver secure and transparent banking services (Lui and Lamb, 2018). It will help the company to easily spread their services through Word-of-Mouth advertisements.

6.4 Promotion:
Monzo can promote their Digital Banking Services through social media platforms Facebook, Instagram, Twitter and YouTube (Paurova and Nadanyiova, 2020). The company can promote their services by developing video content for Algerian people along with meaning full information about the features and attractive images. They can also share the feedbacks of people after using their excellent secure and transparent services on the social media platform. They can also promote their products through TV Ads, Banners, and Posters etc. They can also advertise their products by the celebrities, Facebook, Instagram and YouTube influencers to easily reach a huge number of target customers in Algeria.

7. Marketing Action Plan:

8. Conclusion:
As a conclusive statement, it is required to analyse a market effectively for examining the suitability of the market to expand business in the new market. It will help Monzo Banking Ltd. to develop appropriate strategies and actions in the respect of their marketing objectives in the market. It will help them to prepare a budget for getting an initial concept of overall costing for market expansion. It will help the company to examine the political, economic, social, legal, technological and environmental circumstances. It is also required to analyse the attractiveness of the market to understand forces from suppliers, customers, competitors, substitute products and new entrants. It is recommended Monzo should focus on using appropriate market entry strategy and marketing mix strategy based on the outcome of market analysis while expanding their business in Algeria successfully.

9.References:
Balkan, B., (2021). Impacts of Digitalization on Banks and Banking. In The Impact of Artificial Intelligence on Governance, Economics and Finance, Volume I 33-50. Springer, Singapore.

Council on Foreign Relations. 2021. Political and Economic Instability in Algeria. [online] Available at: [Accessed 11 November 2021].

Datacommons.org. 2021. Algeria - Place Explorer - Data Commons. [online] Available at: [Accessed 11 November 2021].

GOV.UK. 2021. Overseas Business Risk - Algeria. [online] Available at: [Accessed 11 November 2021].

Icaew.com. 2021. Doing business in Algeria. [online] Available at: [Accessed 11 November 2021].

International Trade Administration | Trade.gov. 2021. Algeria - Market Overview. [online] Available at: [Accessed 11 November 2021]. Isac, C., (2019). The Impact of Technologic Innovation on Business in the Financial-Banking Field. International marketing assignmentOvidius University Annals, Economic Sciences Series, 19(2), 122-126.

Islami, X., Latkovikj, M.T., Drakulevski, L. and Popovska, M.B., (2020). Does differentiation strategy model matter Designation of organizational performance using differentiation strategy instruments–an empirical analysis. Business: Theory and Practice, 21(1), 158-177.

Lui, A. and Lamb, G.W., (2018). Artificial intelligence and augmented intelligence collaboration: regaining trust and confidence in the financial sector. Information & Communications Technology Law, 27(3), 267-283.

Macrotrends.net. 2021-a. Algeria Inflation Rate 1970-2021. [online] Available at: [Accessed 11 November 2021].

Macrotrends.net. 2021-b. Algeria GDP Growth Rate 1961-2021. [online] Available at: [Accessed 11 November 2021].

Macrotrends.net. 2021-c. Algeria Economic Growth 1960-2021. [online] Available at: [Accessed 11 November 2021].

MENNA, K. and MEHIBEL, S., (2017). A decade of the Algerian economy: is it really lost. Revue des reformesEconomique et intégrationdansl’économiemondiale, 12(23), 185-226.

Monzo.com. 2021-a. [online] Available at: [Accessed 11 November 2021]. Monzo.com. 2021-b. Banking made easy. [online] Available at: [Accessed 11 November 2021].

Monzo.com. 2021-c. [online] Available at: [Accessed 11 November 2021].

Paurova, V. and Nadanyiova, M., (2020). MARKETING MIX AS PART OF MARKETING STRATEGY USED IN THE SERVICE INDUSTRIES. Economic and Social Development: Book of Proceedings, 649-657.

Sammour, A. and Chen, W., (2019). Artificial Intelligence and customers service in banking: the bank of the future Monzo.

Sestu, M.C. and Majocchi, A., (2020). Family firms and the choice between wholly owned subsidiaries and joint ventures: A transaction costs perspective. Entrepreneurship Theory and Practice, 44(2), 211-232.

Statista. 2021-a. Algeria: projected poverty rate 2018-2021 | Statista. [online] Available at: [Accessed 11 November 2021]. Statista. 2021-b. Algeria: adult literacy rate by gender | Statista. [online] Available at: [Accessed 11 November 2021].

worldbank.org 2021. [online] Available at: [Accessed 11 November 2021].

10. Appendices:
Appendix 1:

Fig 6: Word-of-Mouth Marketing
Source: (Monzo.com. 2021-a)

Appendix 2:

Fig 7: deposits by customers
Source: (Monzo.com. 2021-a)

Appendix 3:

Fig 8: Annual revenue of Monzo
Source: (Monzo.com. 2021-a)

Appendix 4:

Fig 9: Security quality of Monzo
Source: (Monzo.com. 2021-a)