International Journal of Bank Marketing

Customer value proposition, corporate transformation and growth in Caribbean

financial firms
Trevor Alexander Smith
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To cite this document:
Trevor Alexander Smith , (2016),"Customer value proposition, corporate transformation and growth in
Caribbean financial firms", International Journal of Bank Marketing, Vol. 34 Iss 6 pp. 885 - 903
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Customer value proposition, Growth in

Caribbean
corporate transformation financial firms
and growth in Caribbean
financial firms 885
Received 10 May 2015
Trevor Alexander Smith Revised 6 October 2015
Mona School of Business and Management, 1 November 2015
Downloaded by University of The West Indies at Mona At 09:07 12 September 2016 (PT)

Accepted 11 November 2015

University of the West Indies, Kingston, Jamaica

Abstract
Purpose The purpose of this paper is to advance a model for identifying the superior customer value
proposition that evolves through a process of corporate transformation while simultaneously seeking
to align this value proposition with regional expansion and growth of Caribbean financial firms.
Design/methodology/approach The study utilizes a cross-sectional design. Telephone surveys
were used to collect data from 80 financial firms and 243 customers across ten Caribbean countries.
Structural equations modeling was employed for data analysis.
Findings The main findings are that corporate transformation of financial firms was a significant
driver of customer orientation, consumer confidence, quality, flexibility, branding, and firm capability
while lower prices (such as interest rates, fees, and charges), consumer confidence, and branding were
the key drivers of regional expansion and growth.
Practical implications The study identified six value-added dimensions along with price as the
superior customer value proposition of financial firms. These dimensions should be incorporated in the
business model for transformation and growth of these firms.
Originality/value The study extended the literature through development of a customer value
proposition model that was primarily built on Levitts (1965) product life cycle conceptualization and
augmented by Porters generic strategies.
Keywords Caribbean, Growth, Corporate transformation, Customer value proposition,
Financial firms, Regional expansion
Paper type Research paper

Introduction
Many economies across the globe are faced with contracting growth and overall decline
in economic performance. This global decline, over the last two decades, started with
Asia, then the USA, and now Europe and the rest of the world. The argument is often
made that decline in the global economy is catalyzed by sluggish and dwindling
performance of firms; where more than half of the firms that were listed on the Fortune
500 during the decade of the 1950s are no longer on the list today. Some of these once
esteemed entities are either out of business or are struggling to keep afloat. As expected,
Caribbean economies are also experiencing this crisis with countries in the region such as
Jamaica and Barbados that have currently engaged the IMF in balance of payment
arrangements. Consequently, Caribbean firms have recognized the need for growth
strategies, aimed at long-term sustenance of business amid uncertainty and volatility
that permeate world financial markets. To facilitate this growth, a transformation International Journal of Bank
Marketing
Vol. 34 No. 6, 2016
The author would like to acknowledge the financial contribution of National Commercial Bank pp. 885-903
(NCB) and the administrative support of Mona School of Business and Management at the Emerald Group Publishing Limited
0265-2323
University of the West Indies, Mona. DOI 10.1108/IJBM-05-2015-0072
 IJBM process is required to accomplish high levels of performance through behavioral changes
34,6 of the various actors of the firm (Blumenthal and Haspeslagh, 1994).
Financial firms, which have the critical role of providing a strategic and operational
hub for facilitating monetary transactions on behalf of firms, have no doubt become a
keen area of interest among policymakers. Moreover, many firms, including Caribbean
financial firms, have continued to transform through inorganic growth strategies
886 across borders as local economies are either too saturated or too small for sustaining
the growth trajectory of these firms. Further, delivery of superior customer value with a
balanced approach for attaining business objectives (Kaplan and Norton, 2007) lies at
the epicenter of this growth strategy. In addition, customer value becomes even more
important in the context of service operations, such as financial firms. This value must
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be realized through the perception of the customer, which is based on the intangible
nature of service and not the objective reality that can more easily be associated with
the tangible product.
Delivering customer value through a process of corporate transformation for
regional or international expansion is in no way peculiar to Caribbean firms. However,
with the paucity of scholarly work on customer value models for driving growth,
particularly within the Caribbean context (small island states with weak economies,
vulnerability to natural disaster and external economic shocks, high and rising public
debt), research is required to assist Caribbean financial firms to better understand the
superior customer value proposition necessary for business growth across borders.
After all, financial firms cannot continue to only operate in their domestic markets if
they are to grow and remain sustainable.
This study will therefore seek to develop a model for identifying the superior
customer value proposition that will evolve through a process of corporate
transformation and will simultaneously seek to align this value proposition with
regional expansion and growth of Caribbean financial firms. Most notably, given the
global economic environment and emerging market opportunities, growth models can
prove significant to firms in both times of economic growth and times of turmoil
(Giesen et al., 2010).

Product life cycle

The product life cycle provides a lens for addressing this complex problem of relating
corporate transformation and customer value proposition to regional expansion and
growth of firms. This framework was popularized by Levitt (1965) who stated that
most products will transition four stages in their life cycle (development, growth,
maturity, and decline) and in all cases of maturity and decline the industry is
transformed (p. 83). This transformation, Levitt noted, is usually attended by a variety
of aggressive tactics, such as, mergers and buy-outs that make life thanklessly
burdensome for all firms, and make death the inevitable consequence for most of them
(p. 84). Further, he argued that the firms transformation must be aligned with the
wants and needs of the customers as these customers would naturally become
uninterested with the product during the later stages of the life cycle. Moreover,
focussing transformation tactics on the customer will lead to more growth in sales and
profits through an extension of the product life cycle (Levitt, 1965).
In implementing transformation initiatives for growing financial firms, a life cycle
approach to marketing is essential in a highly segmented market ( Javalgi and Dion,
1999). Further, marketing of financial services should be based on the financial needs
of individuals in different stages of the life cycle (p. 96). Indeed, financial firms are
 challenged to manage their products, particularly at the end stage of the life cycle Growth in
(Harness, 2004). Given the importance of corporate transformation for combating Caribbean
product maturity and decline in financial services therefore, this study proposes that
transformation must align with market opportunities through the firms customer
financial firms
value proposition for driving growth and trans-border expansion.

Delivering superior customer value 887

In delivering a superior customer value, firms must create the business experience that
satisfies and often exceeds the customers expectation. This value-driven strategy can
be advanced through a combination of marketing tasks such as: understanding
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customer choices, identifying customer segments, increasing competitive options,

avoiding price wars, improving service quality, strengthening communications,
focussing on what is meaningful to the customer, building customer loyalty, improving
brand success, and developing strong customer relationships (MacStavic, 1997).
Essentially, superior customer value can be viewed as a function of quality, service, and
price (Tucker, 1995); with superior customer value being defined as a positive trade-off
between benefits derived and price paid.
A firm delivers value through its value proposition. This is a promise offered by the
firm that value will be delivered to the customer and is supported by the customers
belief that this value will be received. Value propositioning therefore addresses the
question of: how does the firm want to be perceived by the customer in its delivery of
value and associated benefits? Kaplan (2005) highlighted eight generic elements of the
customer value proposition and categorized them as follows: product and service
attributes (price, quality, availability, selection, functionality), relationship attributes
(service, partnership) and image attribute (brand).
In the context of financial firms, a number of studies have been conducted and
aimed at identifying customer value propositional elements that are most relevant to
these entities. The more recent of these studies are highlighted in Table I.
These elements of customer value proposition were grouped into constructs and
were subjected to a focus group discussion for ensuring that all constructs and related
items were relevant to Caribbean financial firms. This resulted in seven constructs of
customer value proposition: customer orientation, consumer confidence, price, quality,
flexibility, branding, and firm capability. See section on measures below for more
discussion on these constructs.

Corporate transformation, customer value proposition, regional

expansion, and growth
The crafting of an effective strategy, such as a value propositional strategy, will require
a transformational change in the organization for successful implementation of this
strategy (Chidomere and Anyansi-Archibong, 1989). Many firms tend to grow through
regiocentric or geocentric strategies; however, the determination of which countries to
target, which segment of the target countries to include, and how to manage and
implement the marketing efforts is fundamental to the strategic choice (p. 35). Further,
Breur (2006), through his focus on customer value proposition, concluded that there
exists a symbiotic relationship between customer value and firm growth thus signaling
an alignment between value proposition and regional expansion of firms.
Hedley et al. (2006) predicted that the future of regional banks would be fraught with
mergers and acquisitions; a process in which industry specialists, and non-bank
 IJBM Author(s) Year Entity type Customer value propositional elements
34,6
Perissinotto 2003 Insurance Product, service, distribution channels
Bick et al. 2004 Bank Product leadership, operational excellence,
customer intimacy, electronic banking
Chen et al. 2005 Bank Service quality (tangibles, reliability,
responsiveness, assurance, empathy)
888 Perceived risk (functional, physical, financial,
psychological, social, temporal)
Roig et al. 2006 Bank Establishment, personnel, service, price along
with emotional and social values
Ferguson and 2007 Bank Service, price, rewards, trust, confidence
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Hlavinka
Symonds et al. 2007 Bank Convenience (easy neighborhood access, early
morning and late-evening hours and welcoming
banking hall experience)
No fee credit card (for small business owners,
no fees for annual renewal, balance transfers,
cash advances, late payment or exceeding
credit line)
Maas and 2008 Financial services (insurers, Company value (brand, image, reputation)
Graf banks, brokers, investment Product value (quality, performance, price,
advisors) customization)
Service/employee value (know-how,
competence, customer orientation, quality)
Relationship value (trust, confidence,
sympathy, friendship, openness, honesty,
reduced anxiety)
Social value (education, intellect, exclusiveness)
Table I. Titko and Lace 2012 Bank Service quality, customer-employee relationship
Customer value Gatzert et al. 2012 Insurance Risk preference, diversification of opportunities
propositional Parente et al. 2015 Bank Operational quality, convenience and access,
elements of safety and soundness, monetary sacrifice (fees,
financial firms interest rates, tariff)

financial institutions would play a more prominent role. They pointed to the need for
transformation, suggesting that traditional approaches to creating value through
growth and efficiencies will no longer be enough (p. 51). Instead, new products and
services, new markets, along with customer service would be the key drivers of
innovative growth in the future. Ogawa et al. (2013) noted that an increase in financial
sector linkages resulting from cross-border capital flow may provide opportunities for
expansion of regional financial firms within the Caribbean.

Theoretical model
The product life cycle, particularly through its stages of maturity and decline, provides
clear direction for transforming the firm to deliver more value to the customer, thus
extending the life cycle and generating further growth. The proposed model which
links corporate transformation and customer value proposition to regional expansion
and growth is summarized in Figure 1.
Despite efforts of financial firms to improve the customers experience through
corporate transformation, a benchmarking study of markets within the USA has
revealed that willingness of customers to recommend their banks to friends or family
 Elements of customer value Growth in
proposition
Caribbean
Customer orientation
Customer intimacy
financial firms
Sympathy
Friendship
Customer orientation
Customer-employee
relationship 889
Consumer confidence
Trust
Confidence
Comfort level for doing
business
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Safety

expansion
Openness

Regional
growth
Corporate Honesty

and
transformation Price
Price, fees, and charges
Rewards
Quality
Product quality
Service quality
Product leadership
Operational excellence
Flexibility
Convenience
Customization
Diversification of
opportunities
Distribution channels
(options to conduct
business) Figure 1.
Branding Theoretical model
Brand for linking corporate
Image
Exclusivity (special)
transformation and
Firm capability customer value
How-to (getting things proposition to
done)
regional expansion
Competence
Educated/intellectual staff and growth

[] is among the lowest of any industry [] and only health insurance providers score
lower with their customers than banks (Symonds et al., 2007, p. 5). These findings are
expected to be similar in the Caribbean setting. Therefore, few can argue against the
importance of successfully delivering a superior customer value in the context of
Caribbean financial firms (Bick et al., 2004); where firms must transform and grow if
they are to seize opportunities across borders (Penrose, 1959). Thus, the objective of
this study is to establish what customer value propositions are influenced by corporate
transformation and simultaneously drive regional expansion and growth of Caribbean-
based financial firms.

Corporate transformation, customer orientation, regional expansion, and growth

The transformation of firms into high-performing businesses lies in focussing on the
customer, for it is one of the key areas for action (Nayak et al., 1992). In banking, for
example, customer orientation was identified as one of the main outputs of
the transformation process (Bons et al., 2012). Further, there is an established link in
the marketing management literature between customer orientation and performance
outcomes: profits, growth, expansion, etc. (Kennedy et al., 2003). Moreover, transformation
 IJBM initiatives such as mergers and acquisitions must simultaneously be aligned with
34,6 customer orientation during the expansion and growth of firms (Swaminathan et al., 2014).
Taken together, therefore:
H1. Corporate transformation is positively associated with customer orientation.
H2. Customer orientation is positively associated with regional expansion and growth.
890
Corporate transformation, consumer confidence, regional expansion, and growth
In the insurance industry, transformation through mergers and acquisitions is viewed
as an optimal mechanism for increasing consumer confidence and market stability
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(Nektarios, 2010). Consumer confidence is strongly linked to performance in financial

circles. Even during the difficult time of the post 9/11 recovery period, consumer
confidence was deemed a reliable predictor of growth of firms on the stock exchange
(Wong and Lievano, 2009). Similarly, Solanki and Seetharam (2014) found that
consumer confidence was a positive indicator of stock market growth. Furthermore,
analysis of data from 31 countries revealed that favorable changes in consumer
confidence will positively impact growth and stock market returns across countries
(Sum, 2014). Taken together, therefore:
H3. Corporate transformation is positively associated with consumer confidence.
H4. Consumer confidence is positively associated with regional expansion and growth.

Corporate transformation, price, regional expansion, and growth

In Asian markets, transformation of firms through infrastructural investments resulted
in reduced margins, lower consumer prices, along with increased quality, and diversity
of commodity (Reardon et al., 2014). Corporate transformation initiatives are aligned to
the firms competitiveness (Kennedy, 1998); and therefore are expected to help the firm
to reduce prices to customers. Thus:
H5. Corporate transformation is positively associated with lowering of price to
customers.
In a review of the financial performance of the 20 largest commercial banks in the USA,
Weigand (2013) found that 15 of the 20 banks reported record growth in revenues in
2012; with large portions of earnings generated from price proxies of interest income,
trading activities, and fees. This increase in revenue signals the importance of price to
growth of financial firms. Further, econometric evidence among Caribbean commercial
banks revealed that capital movements and growth of banks are restricted when
monetary policy leads to higher interest rates or when the banks themselves increase
interest rates (Khemraj and Pasha, 2012). Thus suggesting that:
H6. Lowering of price to customers is positively associated with regional expansion
and growth.

Corporate transformation, quality, regional expansion, and growth

Corporate transformation programs have long been associated with improved
service quality in UK banks (Newman et al., 1998) and other financial firms (Drew,
1996). A merger, for example, is a transformation strategy that is often used for
 improving product and service quality (Blair and Haynes, 2011; Willig, 2011). Thus, it is Growth in
being proposed that: Caribbean
H7. Corporate transformation is positively associated with quality. financial firms
Chinas investment banks which demonstrate high-service quality, command better
prices, and receive a higher quantity of quality clients in pursuit of growth (Haoping
and Wei, 2007). Similarly, service quality was found to significantly influence 891
profitability in the Taiwanese banking industry; thus setting the stage for growth
(Ming and Ing, 2005). Hence, it is being proposed that:
H8. Quality is positively associated with regional expansion and growth.
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Corporate transformation, flexibility, regional expansion, and growth

In a study on corporate transformation, flexibility was unanimously reported among the
top qualities required by managers for carrying out change programs (Coulson-Thomas,
1992). This management quality would usually manifest itself in flexibility of service to
customers in areas such as convenience (Symonds et al., 2007), customization (Maas and
Graf, 2008), and diversification of opportunities for customers (Gatzert et al., 2012). Hence:
H9. Corporate transformation is positively associated with flexibility.
Flexible and convenient banking are generally associated with growth (Cheng, 2012).
However, there are cases in contemporary banking history where flexibility did not
result in successful growth. For example, Citigroup, which provided a phenomenal
demonstration of flexibility through diversified activities of banking, securities, and
insurance services proved disastrous during the 2000s. This was when the
conglomerate pursued a high-risk, high-growth strategy and became not only too
big to fail, but also too large and complex to manage and regulate (Wilmarth, 2014).
This would suggest that, on balance, flexibility is related to growth, but needs to be
tempered for generating successful growth. Thus:
H10. Flexibility is positively associated with regional expansion and growth.

Corporate transformation, brand, regional expansion, and growth

Corporate transformation that resulted in the development of stronger brands was
responsible for survival and growth of dot.coms that endured the onslaught of the
internet meltdown in the 1990s (Constantinides, 2004). India provides a good example of a
massive growth strategy commissioned by its government to allow foreign direct
investment in multi-brands, including insurance and airlines, for creating a competitive
environment and growth in the economy (Rajanath and Mishra, 2014). Corporate
transformation through investments into mergers and acquisitions is therefore attributed
to the successful creation of brand value, increased market power, and increased revenue
growth in Indian firms (Aruna and Nirmala, 2013). Taken together, therefore:
H11. Corporate transformation is positively associated with branding.
H12. Branding is positively associated with regional expansion and growth.

Corporate transformation, capability, regional expansion, and growth

Corporate transformation is necessary for improving capabilities within firms (Sharma
and Christie, 2010). Moreover, there is an established link between firm capability and
 IJBM growth, where firms grow to become multinational entities (MNEs) largely due to
34,6 excess capabilities (Penrose, 1959). Thus:
H13. Corporate transformation is positively associated with firm capability.
H14. Firm capability is positively associated with regional expansion and growth.
This study examines the role of corporate transformation in impacting customer value
892 proposition elements of financial firms. In addition, relationships between these
elements, regional expansion and growth are also examined. These associated
hypotheses are summarized in research model in Figure 2.
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Method
The study employed a cross-sectional design in which data were collected through the
use of telephone surveys. The survey approach was selected for three reasons: First, to
utilize a cost effective way to obtain data from a usable sample of financial firms across
the region. Second, to capture a wide cross-section of perceptions on customer value
proposition, based on the subjective theory of value, which asserts that value is
predicated on the subjective reality of the individual (Reinecke, 2010). Third, to obtain
proxies of corporate transformation and regional expansion and growth. These
constructs are more longitudinal than cross-sectional in concept and therefore require
complex measures; and so, proxies (readiness for corporate transformation and
readiness for regional expansion and growth) that could reasonably be measured by
surveys, were used to represent them.

Customer orientation

Consumer confidence

H2
H1

Price H4
H3

H6
H5 Quality

H7 H8
Corporate Regional
transformation Flexibility expansion
H9 H10 and growth

H11 H12
Branding

H14
H13
Firm capability
Figure 2.
Research model
 Instrument Growth in
Two survey instruments were developed: one for the firm and the other for the Caribbean
customer. The instrument for the firm was used to collect demographic data, along with
data on readiness for corporate transformation and readiness for regional expansion
financial firms
and growth. This multi-section instrument was piloted with a subsample of firms from
the targeted population aimed at attaining validity on the overall instrument.
The participants from the pilot were incorporated into the study sample; as the 893
preliminary analysis suggested, no major changes to the scales of the survey
instrument (see Lewis et al., 2003). The instrument for the customer constituted
customer demographic and customer value proposition items. Similarly, to the
instrument on the firm, validity was sought on the instrument for the customer, and
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pilot data were incorporated into the final sample where appropriate.

Measures
The measurement (outer) model comprised nine first order constructs: quality, customer
orientation, flexibility, consumer confidence, price, branding, firm capability, readiness
for corporate transformation, and readiness for regional expansion and growth.
Readiness for corporate transformation was measured using seven Likert type items
derived from the Armenakis et al.s (1993) definition of change readiness, i.e., the
individuals beliefs, attitudes, and intentions regarding changes that are needed, backed
by the organizations capacity to successfully undertake these changes. Examples of
these items are: the staff of my organization is ready for large-scale changes (such as
mergers or acquisitions or corporate restructuring or downsizing) and my organization
has the capacity to successfully undertake and manage radical changes. Readiness for
regional expansion and growth was measured with six Likert type items gleaned from
Penroses (1959) theory on growth of firms; and include questions such as, my
organization has the resources and capabilities to deal with barriers to entry into
countries across the English-speaking Caribbean and my organization has the
resources and capabilities to grow our firm across borders through mergers or
acquisition or strategic alliances within the English-speaking Caribbean.
The marketing management literature on financial firms, highlighted in Table I, was
used to identify key items of the customer value proposition. These items were grouped
into constructs and subjected to a focus group discussion aimed at ensuring that both
constructs and associated items were relevant and in accord with Caribbean reality.
Based on insights gained from the focus group, constructs were modified and items
added or dropped, resulting in seven constructs of customer value proposition. These
seven constructs were measured with Likert type scales. Of note, is that the observed
items of all nine constructs of the outer model were measured using five-point Likert
scales and modeled as first order latent through multiple reflective indicators.

Sample
The telephone survey utilized the combined online yellow pages of financial firms
across ten Caribbean countries (Anguilla, Bahamas, Barbados, Dominica, Grenada,
Jamaica, Puerto Rico, St Lucia, St Martin, Trinidad and Tobago) as the sample frame
for study. A representative sample of approximately 400 firms, stratified by country
and financial institution type (bank, life insurance, general insurance, and other
financial firms), was then drawn from the sample frame. This large sample was
compiled due to the historically low response rate of telephone surveys within the
 IJBM region (Smith and Deslandes, 2014). Based on the response rate of approximately
34,6 20 percent, the study utilized a final sample of 80 financial firms for analysis.
Importantly, 80 is the minimum sample size recommended in PLS-SEM for models with
a maximum of seven arrows pointing at a construct, as in the case of this study,
for attaining statistical power of 80 percent with significance levels of 5 percent.
See Hair et al. (2014, p. 21) for Cohens recommended sample size in PLS-SEM models.
894 Many of the firms surveyed offered multiple services with 34 percent banking,
50 percent general insurance, 12 percent life insurance, and other financial services
accounting for the remaining 4 percent. 95 percent of the respondents were employed in
a management capacity, while the other 5 percent operated at the supervisory level.
Upon completion of the survey of firms, staff and students from the University of
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the West Indies campuses in Jamaica, Trinidad and Tobago, Barbados and other
territories were prospected through face-to-face contact. Then, individuals were
selected for survey on the criteria that: they were willing to participate in the study and
were customers of at least one of the firms surveyed for a minimum of two years.
These individuals were then asked to refer friends and families whom they believed to
be customers of the selected firms. The referred individuals, where suitable and
accessible, were then interviewed via telephone survey and were asked to refer other
prospects themselves. Through this snowball sample technique, a final sample of
243 customers, across the 80 firms, was obtained for study. See Table II.

Variables Frequency % Cumulative %

Country of regional head office

Anguilla 2 2.5 2.5
Bahamas 3 3.8 6.3
Barbados 8 10.0 16.3
Dominica 2 2.5 18.8
Grenada 4 5.1 23.8
Jamaica 32 40.1 63.8
Puerto Rico 1 1.3 65.0
St Lucia 4 5.0 70.0
St Martin 1 1.3 71.3
Trinidad and Tobago 23 28.8 100.0
Total firms 80 100.0
Services offered
Banking 32 33.7 33.7
General insurance 48 50.0 83.7
Life insurance 11 12.0 95.7
Other financial services 4 4.3 100.0
Total firms 80a 100.0
Position of respondent
Management 72 94.7 94.7
Supervisory 4 5.3 100.0
Total firms 76 100.0
Customers 243 100.0 100.0
Table II. Total customers 243 100.0
Descriptive statistics Note: aSome of the firms offer more than one service (multiple responses) and so count does not add to
on survey sample 80 firms
 Data analysis and results Growth in
Structural equation modeling (SEM) using partial least squares (with Smart PLS 3) was Caribbean
used for assessing both outer measurement and inner relationship models. PLS-SEM,
instead of a covariate-based SEM (e.g. LISREL and AMOS), was selected as the tool for
financial firms
analysis. This technique is noted for its assumptions of high level of statistical power with
small samples, no distributional assumptions, ease of handling complex models, and ability
to minimize unexplained variances (Hair et al., 2014). As such, it is widely endorsed by top 895
journals in marketing, and thus, is quite suited for the model proposed by this study.
The robustness of the measurement model was examined through factor loadings/
cross-loadings, average variance extracted (AVEs), composite reliability procedures,
and both convergent and discriminant validity measures. In addition, testing of
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statistical significance along structural paths was accomplished by the PLS bootstrap
resampling method.
The measurement model was first assessed, and all item loadings that fell below the
acceptable threshold of 0.70 suggested by Hair et al. (2014) were eliminated.
The resulting model returned loadings ranged between 0.700 and 0.926 (see Table III).
Descriptive statistics of mean and standard deviation were generated for each
construct (see Table IV). Table IV also presented composite reliability (ranged between
0.817 and 0.918) and AVEs (ranged between 0.626 and 0.756) with both indicators
exceeding recommended cut-offs (Chin, 1998; Hair et al., 2014). Thus, composite
reliability and convergent validity were both established.
Construct AVEs were also greater than the variance shared between constructs
(Table V), thus satisfying criteria for discriminant validity (Chin, 1998; Hair et al., 2014).
In conceptualization of the structural model, readiness for corporate transformation
was mapped to the seven constructs of the customer value proposition and these seven
constructs were further linked to readiness for regional expansion and growth based on
Levitts (1965) version of the product life cycle. This theory suggests that at the
maturity and decline stages of the product, the firm will transform (corporate
transformation) to extend the life of the product. This transformation must align with
the market opportunities (customer value proposition) to further extend the product life
cycle, thus enabling more growth (regional expansion and growth).
The results from the structural model (Figure 3) showed that the seven dimensions of
customer value proposition accounted for 15 percent of the variances observed in regional
expansion and growth. Further, corporate transformation was significantly associated
with all customer value proposition elements in the model at p 0.05; except for price
which was not significant. Hence, H1, H3, H7, H9, H11, and H13 were supported.
Price ( 0.289; p 0.05), consumer confidence ( 0.399; p 0.10), and branding
( 0.294; p 0.10) were the only significant drivers of regional expansion and growth;
thus, H4, H6, and H12 were also supported. No relationships were found on the impact
of customer orientation, quality, flexibility and firm capability on regional expansion
and growth; hence H2, H8, H10, and H14 were not supported.
An observation of the path coefficients (from the bootstrap results) further showed
that corporate transformation was more impactful on consumer confidence ( 0.364;
p 0.01) than on the other customer value propositions. In addition, consumer confidence
had the strongest effect of the three key drivers of regional expansion and growth.

Discussion and implications

Consistent with the implications of the product life cycle, the study found strong empirical
evidence to suggest that corporate transformation of financial firms impact customer value
 IJBM Item
34,6 Constructs loadings

Customer orientation
Customer-employee relationship 0.854
Customer orientation 0.833
896 Sympathy 0.787
Customer intimacy 0.781
Consumer confidence
Confidence 0.753
Openness 0.773
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Honesty 0.891
Comfort level for doing business 0.891
Price
Price, fees, charges 0.735
Rewards 0.920
Quality
Product quality 0.896
Service quality 0.850
Product leadership 0.863
Flexibility
Convenience 0.700
Diversification of opportunities 0.826
Distribution channel/options to conduct business 0.902
Branding
Brand 0.926
Image 0.904
Exclusivity/superiority 0.743
Firm capability
How to/getting things done 0.818
Competence 0.876
Educated/intellectual staff 0.883
Readiness for corporate transformation
Management ready for large-scale changes e.g. merger, acquisition, etc. 0.855
Management ready for large-scale changes e.g. merger, acquisition, etc. 0.838
High levels of commitment among staff 0.720
Readiness for regional expansion and growth
Organization has capability to deal with barriers to entry into English-speaking
Caribbean countries 0.820
Organization has resources and capability to compete with financial firms across
countries within the English-speaking Caribbean 0.876
Organization has the capacity to handle movement of services, capital and labor across
borders within the English-speaking Caribbean 0.878
Table III. Organization is sufficiently endowed with the knowledge requirements for regional
Item loading expansion of financial firms across the English-speaking Caribbean 0.773
for resulting Organization has the resources and capabilities to grow the firm across borders through
measurement model mergers or acquisition or strategic alliances within the English-speaking Caribbean 0.804
 propositional elements of customer orientation, customer confidence, quality, flexibility, Growth in
branding, and firm capability. A possible explanation is that the products and services Caribbean
offered by financial firms within the region are at the stages of maturity and decline. Thus
the transformation initiatives that are taking place (restructuring, downsizing, process
financial firms
improvements, etc.) are connecting with the customers through call center operations,
online banking, personal banking, and other customer service touch points. Levitt (1965)
theorized that at the stages of maturity and decline, the customer would naturally lose 897
interest in the product, so transformation of the product is necessary to stimulate demand.
Similar to the other dimensions of the customer value proposition, the corporate
transformation interventions were expected to impact price of financial products and
services to customers (Coldwell et al., 2012; Reardon et al., 2014). Nonetheless, the study
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found that price was the only element that was not impacted by transformation. It must
be noted that due to prevailing monetary policies of regional governments, some
aspects of price are outside the sphere of influence of financial firms. However other
aspects, including fees and charges, fall reasonably within the control of the entities,
and therefore have become a disconcerting issue among customers, who feel that the
savings gained through corporate transformation are not being apportioned to them.
Even though price was the only dimension that was not impacted by corporate
transformation, the findings indicate that the lowering of prices was the main driver for
future possibilities of regional expansion and growth. This is supported by the notion

Constructs Mean SD CR AVE

Customer orientation 3.516 0.457 0.887 0.663

Consumer confidence 3.683 0.423 0.893 0.626
Price 3.056 0.583 0.817 0.693
Quality 3.537 0.475 0.903 0.756 Table IV.
Flexibility 3.417 0.545 0.853 0.662 Descriptive statistics,
Branding 3.415 0.565 0.895 0.742 composite
Firm capability 3.800 0.366 0.894 0.738 reliabilities (CR), and
Readiness for corporate transformation 3.591 0.756 0.847 0.651 average variance
Readiness for regional expansion and growth 3.610 0.856 0.918 0.691 extracted (AVE)

CO CC PR QL FL BR FC RCT RREG

Customer orientation (CO) 0.814

Consumer confidence (CC) 0.610 0.791
Price (PR) 0.470 0.460 0.833
Quality (QL) 0.621 0.671 0.536 0.870
Flexibility (FL) 0.594 0.515 0.533 0.548 0.814
Branding (BR) 0.546 0.593 0.584 0.620 0.730 0.862
Firm capability (FC) 0.369 0.532 0.219 0.405 0.389 0.441 0.859
Readiness for corporate
transformation (RCT) 0.310 0.364 0.148 0.342 0.260 0.244 0.250 0.807
Readiness for regional expansion Table V.
and growth (RREG) 0.305 0.237 0.0.075 0.084 0.066 0.170 0.072 0.318 0.831 Inter-construct
Notes: On-diagonal items represent the square-root of the variance shared between the constructs and correlations and
their measures. Off-diagonal elements are the correlations between the constructs discriminant validity
 IJBM Customer orientation

34,6 (R 2)
0.096

Consumer confidence
2 0.123ns
(R )
0.310* 0.132

898 Price 0.399***

0.364* 2
(R )
0.022
0.148ns 0.289**
Quality
(R 2)
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2
(R ) ns
0.145
0.342* 0.061
0.117
Readiness for Readiness
corporate Flexibility
0.048ns for regional
transformation 0.260* 2 expansion
(R ) and growth
0.068
0.294***
Figure 3. 0.244** Brand
Structural model 2 0.118ns
(R )
on corporate 0.060
transformation, 0.250** Capability
customer value
proposition, and 2
(R )
regional expansion 0.062
and growth
Notes: ns, not significant. *p-0.01; **p-0.05; ***p-0.10

that financial markets within the region are highly price sensitive as customers are
barely able to differentiate among service offerings (see Porter, 1985).
Other determinants of regional expansion and growth, based on the studys
findings, are consumer confidence and branding. Intuitively, it would seem that more
people across the region would buy when there is market confidence. This assertion
has been supported by the literature where consumer confidence was found to
influence growth of firms on the stock exchange (Wong and Lievano, 2009) and stock
market returns across countries (Sum, 2014). Like consumer confidence, a good brand
will transcend borders and would naturally lead to growth of firms and formation of
MNEs where there is excess capacity (Penrose, 1960).
The findings of this study present several implications for transforming financial firms
through customer value propositions for regional expansion and growth. First, in a more
generic sense, the firm is armed with two strategies: price and value-added differentiation
(Porter, 1985). Thus, this study has identified six key value-added dimensions of financial
firms (customer orientation, consumer confidence, quality, flexibility, branding, and firm
capability) along with price. Further, these six elements constitute the superior customer
value proposition and are all positively impacted by corporate transformation. Financial
firms must therefore embrace all six propositions as a generic and standard strategy and
must further differentiate on a chosen combination of these propositions (Porter, 1985)
concomitant with their resources and capabilities (Barney, 1991). Second, while the firm can
choose between price and differentiation in its value-added strategy, in the context of
growth and regional expansion, financial firms must focus their transformation efforts to
reduce price to customers while simultaneously differentiating on consumer confidence and
branding. Third, despite their best effort, growth of firms will be stymied by maturity and
 decline in the products life cycle (Levitt, 1965). Financial firms must therefore embrace Growth in
corporate transformation programs, instituting radical changes, such as, corporate Caribbean
restructuring and downsizing for recapturing or attaining further growth.
Although the study presented a rigorous model for growing financial firms, there are at
financial firms
least two constraints that must be highlighted. First, the study utilized a relatively small
sample, albeit adequate, based on the assumptions advanced by Hair et al. (2014); vis--vis
number of observations to latent constructs in PLS-SEM modeling. However, due to the 899
very small subsamples at the country level, country-specific inferences cannot be drawn
from this study. Second, based on the exigencies of telephone survey-based data capture,
the findings are subject to over and under-reporting. Attempts were however made to
minimize this effect by capturing a few customer respondents per firm as suggested by
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prior survey-based research such as Gold et al. (2001). Further research is therefore needed
to examine this model at the country-specific level, mainly due to the dynamic nature of the
customer value proposition which could be very different from country to country.

Conclusion
The study presented a model of the superior customer value proposition that
simultaneously aligns with corporate transformation, regional expansion, and growth of
Caribbean-based financial institutions. This project was undertaken in response to the gap
in the literature on the sought-after link between transformation, customer value and firm
growth within the exigencies of Caribbean reality vis--vis small island states with weak
economies and prone to natural disaster. This study has therefore addressed this gap.
The findings from model testing are that corporate transformation was a significant
driver of customer orientation, consumer confidence, quality, flexibility, branding, and
firm capability, while lowering of price, consumer confidence, and branding were key
drivers of regional expansion and growth.
Through the process of model development and testing, the study offers useful
insights into the product life cycle theory and posits that strategies employed within
the firm along the path of development, growth, maturity, or decline must be crafted
with the options of price vs value-added differentiation for expanding and growing
firms. Importantly, this reflects an extension to the extant literature to the extent that
the model augments Levitts (1965) product life cycle conceptualization with Porters
generic strategies of price vs value-added differentiation.
In addition, the findings suggest at least two untapped opportunities for further
research. First, this model should be tested with non-financial firms with the view of
determining applicability across firm-type. Second, further research should replicate
this model with other underlying dimensions of the customer value proposition as with
the dynamic nature of this construct, different outcomes may emerge with varying
conceptualization. In the final analysis, financial firms could meaningfully utilize this
model for delivering a superior customer value proposition and for growing and
expanding their businesses within and across borders.

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 About the author Growth in
Dr Trevor Alexander Smith is the Head of Marketing and Lecturer in Marketing and Research Caribbean
Methods at the Mona School of Business and Management, University of the West Indies. His
research interest is in marketing with emphasis on customer knowledge management. He has financial firms
published in a number of rated international journals and is considered an accomplished
Methodologist in structural equations modeling. Dr Trevor Alexander Smith is also a Consultant
in the areas of marketing, marketing research, and strategy. Dr Trevor Alexander Smith can be
contacted at: trevor.smith@uwimona.edu.jm 903
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