Lehman Brothers-Revival Marketing Plan
History of the Company
Lehman Brothers Holdings, Inc. offered global financial services in the banking industry. Before its 2008 bankruptcy, Lehman was among the leading banks in the U.S. The bank primarily dealt with private banking services, fixed income, and equity sales, investment banking, management of investments, private equities, and treasury securities trade (Anders, 2010). In the United States history, Lehman’s corporate bankruptcy was the largest. Founded in 1850, Lehman had operated for 158 years until 2008 when it filed bankruptcy. PLAGIARIZED SAMPLE ORDER YOUR PAPER NOW
Why Did Lehman Fail
Lehman Brothers filed for bankruptcy in 2008. At the time of filing for bankruptcy, the bank had assets worth $639 billion and $619 in debt (Anders, 2010). The bankruptcy surpassed those of WorldCom and Enron, companies considered as the industry’s giants in the US history. The major reasons behind Lehman’s failure were:
Lack of buyers
The major problem at Lehman was lack of buyers. In reference to other investment banker institutions such as Washington Mutual, Bear Sterns, and Wachovia- none declared its bankruptcy for they found buyers for their products (Madelyn, 2018). Marketing strategies used by Lehman were a mess.
Balance sheet disasters
Due to lack of buyers of Lehman’s banking products, the only option was the Federal Reserve coming through using emergency loans. The Federal Reserve never trusted Lehman’s financial strength in providing security to the loan (Balaji, 2014). Despite the Federal Reserve’s position to technically offer Lehman a loan, the calculations hindered them from doing so.
Lack of political palatability for bailouts
The U.S banking market increasingly became irritated by the financial sector. The proposal by the US government through the Treasury to step in to rescue Lehman at the expense of taxpayers did not sail politically (Nick, 2018). Based on Lehman’s acquisitions, the losses were deemed insignificant- and thus the Treasury deserved to bail Lehman; unfortunately, it did not.
Lehman’s failure indirectly affected average Americans
In reference to AIG case, it was bailed out immediately after Lehman’s failure to tune $85 billion. Also, Lehman lacked an acquirer; the financial position was also pathetic; and losses exceeded potential profits (Daniel, 2010). In this case, Lehman’s failure could not directly affect Americans.
When it filed its Bankruptcy
As per the Chapter 11 bankruptcy protection Act of the US Constitution, Lehman publicly declared its lack of financial capability by filing for bankruptcy on 15th September 2008. Lehman Brothers’ bankruptcy is the largest in the U.S history with the company holding assets worth over $600 billion (Anders, 2010). The bank’s bankruptcy case was the biggest casualty in the global credit crisis, for Lehman Brothers was in advanced talks to dispose of its investment management assets with crown jewels included.
What would you have done differently?
Lehman Brothers failure could be termed as “self-imposing.” It a subjective view, Lehman failed in its marketing and promotional campaigns across the US and other global target markets for its banking products. The top cause of Lehman’s collapse was lack of buyers for its banking products that ranged from investment banking, mortgage loans, treasury securities, equity and fixed income products, investment management, and private equities (Daniel, 2010). The marketing director of the investment bank failed, and thus a major cause of Lehman’s bankruptcy. In this part, I will explain the different approach(s) that I would have taken differently as the marketing manager of Lehman before its collapse.
In Lehman Brothers marketing strategies, free items were not used. Free items such as opening an account or opening a premium bank account with Lehman lacked in the bank’s adverts (Balaji, 2014). As a marketing director, I would not fail to include free items in the bank’s advertisement for the other key products.
Lehman Brothers promotional campaign programs did not feature credit cards. Given the position of a marketing manager, I would suggest the provision of special credit cards for customers based on their economic status, for example, for mature bankers, college students, and small-business owners. Also, I would ensure that the cards have low-interest rates and fair fees (Madelyn, 2018). Also, I would ensure the credit cards provide reward and cash-back programs to customers. PLAGIARIZED SAMPLE ORDER YOUR PAPER NOW
Use of social media
Lehman Brothers filed for bankruptcy in 2008. At this year, social media platforms such as Facebook were present, but the marketing team ignored its importance and majored more on website adverts (Nick, 2018). Given the marketing manager position before then, I would use Facebook and always post new investment bank offers and products for customers to view online and buy at any time they so wish.
By 2008, the internet and smartphones had gained considerate popularity, and many customers for Lehman Brothers had tuned to doing most of their activities online. However, the bank was not proactive and innovative enough to initiate online banking services. This is an approach that I would have given priority in the company website to allow customers to navigate and access banking information over their smartphones anytime (Daniel, 2010).
Advert of Lehman Brothers before 2008
Lehman Brothers Holdings marketing communication was also a crisis before its 2008 bankruptcy. Poor advertising strategies made the firm to collapse in the industry. An example of Lehman Brothers advertisement before 2008 is as below stated and explained:
“When you are smarter about your audience’s needs and behaviors, you can meet those needs more effectively.” The line was aired on the television to advertise the existing investment banking, mortgage loans, treasury securities, equity and fixed income products, investment management, and private equities products to the customers. In this TV advert, Lehman Brothers failed to observe its mission in the baking world. The target market received no new information from the firm, and this had no impact on the market. Instead, it raised advertising costs for Lehman (Daniel, 2010).
New Marketing Plan
Use of social media marketing: For Lehman’s comeback to be realized, use of social media marketing in platforms such as Facebook, Twitter, and Instagram for products like credit cards, soft loans, mortgages, and others to boost customer numbers in the market.
Integration of 4Ps of Marketing: A marketing plan that integrates the product, price, promotion, and place of the banking products offered by Lehman is required before advertising or promoting the product premiums in the market (Anders, 2010). Price of the product must be cheaper than competitors. Promotional programs such as social media and company website will be mandatory. Finally, effective distribution networks using loan salespeople will be necessitated.
Subjectively, the most suitable comeback advert statement for Lehman’s in the investment banking industry is, “Why Settle for Less? Fair, Reasonable and Non-Discriminatory Investment Bank Is Here_ Lehman Brothers Holdings.” For the Best Investment Bank Product Offers, Visit Our Offices during the Daytime or Find us Online on a 24-7 hour basis. PLAGIARIZED SAMPLE ORDER YOUR PAPER NOW
In conclusion, poor marketing approaches by a company result in business failure. The modern investment banking industry has become highly competitive and requires the marketing team to be creative and innovative when designing marketing strategies. The effective use of social media and company website serves as the most cost-effective and diverse form of broadening the market base targeted by any firm. For Lehman Brothers Holdings Inc. to come back and remain relevant in the investment banking industry- the marketing team must embrace new banking technologies and advertising approaches.
Anders, R. (2010, February 3). 22 Largest Bankruptcies in World History. Retrieved from InstantShift: http://www.instantshift.com/2010/02/03/22-largest-bankruptcies-in-world-history/
Balaji, V. (2014). Why did Lehman Brothers fail while other financial firms did not? Quora, 2-16. Retrieved from https://www.quora.com/Why-did-Lehman-Brothers-fail-while-other-financial-firms-did-not
Daniel, I. (2010). 4 Reasons Why Lehman Failed. The Atlantic, 1-12. Retrieved from https://www.theatlantic.com/business/archive/2010/09/4-reasons-why-lehman-failed/62588/
Madelyn, A. (2018). Lehman Failed for Good Reasons. The New York Times, 1-16. Retrieved from https://www.nytimes.com/2018/09/17/opinion/lehman-brothers-financial-crisis.html
Nick, L. K. (2018, December 3). The collapse of Lehman Brothers: A case study. Retrieved from Investopedia: https://www.investopedia.com/articles/economics/09/lehman-brothers-collapse.asp