Differentiated Market Positioning
Every securities firm has its own history and distinctive corporate culture and should choose the market positioning that fits its own characteristics. In the right position, a company can make the most of its advantages. Market positioning is about defining products, services, and business image, and identifying competitors and target consumers. For example, CICC and CITIC compete in research and human resources and also compete for cooperation and collaboration with large companies. They usually get large underwriting contracts, serve major clients, and build on quality-based growth. However, Guoxin, Ping'an and CMS have a large number of employees but receive mainly small and medium underwriting contracts, serve ordinary companies, and build on quantity-based growth. These two types of securities firms will be complementary in the IPO market.
Market segmentation and branding into the target consumer group are at the core of differentiated marketing. Based on market segmentation and by means of branding activities, a company identifies individual needs in the target market, adds a special value to its brand, creates a distinctive image, and builds brand differentiation for its own core competitive advantage. The fact that consumers have different hobbies, personalities, values, incomes, and spending patterns determines different brand preferences. This is the reason behind differentiated marketing. Through marketing, securities firms can convey different brand values to the public. Some advertise people-oriented care and considerate service, whereas others boast professional investment and quality service.
Differentiated Products and Services
Product differentiation is reflected in the process of financial innovation. For example, some securities firms are good at designing debt derivatives, some are better at equity derivatives, and some excel at interest rate derivatives. Particular strengths in specific product innovation and pricing enable different securities firms to attract investors of different risk appetites. Service differentiation refers to relative strengths a securities firm may have in one of several financial services on offer (including brokerage, equity/debt financing, M&As and restructuring, investment consulting, and wealth management). A financial holding group can build on the relative strengths of each subsidiary and provide one-stop services in banking, insurance, and securities. An independent securities firm can make the best of its relative strengths in specialization and flexibility and provide personalized financial services.
Differentiation of Business Regions
Chinese securities firms will be categorized as large, nationwide companies, as well as small and medium regional ones. Large firms conduct business across the country and create a link between business activities on a nationwide, or even international, scale. Regions where local economy is relatively developed and the local market is vibrant provide a large number of potential corporate clients. Small and medium firms committed to the service of local economies and investors, as well as the development of regional capital markets, have a better understanding of local companies and work intensively rather than extensively. They can find their own way to success and be more recognized by local customers.
Differentiation-based management and competition is a major industrial reform topic and also an inevitable trend in the Chinese securities industry to achieve market-oriented development. Such management and competition can help shape a sound multilevel structure, bring about healthy competition, and improve the efficiency and resilience of the entire industry.