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Southeast Bank Checking Account Case

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Would the below questions down below be all part of the second major marketing mix tool - pricing. How can I use the the questions and answers below to formulate and essay? Many thanks!

1. What type of new product pricing strategy would be involved in considering a new free checking product for the bank?

2. What types of product mix pricing considerations do you see in banks pricing for checking accounts?

3. What types of price adjustment considerations do you see in the pricing strategies for checking accounts?

4. What strategy would your recommend that Southeast Bank pursue on the free checking account issue? What options does it have? How can break even analysis (presented in Chapter 10) assist you in your analysis of the various options?

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Solution Summary

The solution helps the student to begin writing an essay based upon the checking account dilemma faced at Southeast Bank.

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Yes, all of these questions are related to pricing. To formulate an essay, consider the following answers to the four questions and then just try to establish flow from one to another:

1. What type of new product pricing strategy would be involved in considering a new free checking product for the bank?
The most applicable pricing strategy present in this scenario is the Penetration Strategy. The Penetration Strategy mandates that a firm artificially lower prices on a high quality product or service in an attempt to gain market share and produce revenues by leveraging economies of scale (make up for lower prices by increasing volumes). The bank is considering free checking-a product that traditionally affords the bank lower profits initially, something they hope to recapture in the long run by way of increased market share and then use optional product pricing to try to convince customers to utilize other products and services offered by the bank such as home equity loans and savings accounts.

2. What types of product mix pricing considerations do you see in banks pricing for checking accounts?
The bank must consider that the free checking is going to lower revenues in the short run. As such, the bank could absorb these costs until market share is increased or, most likely, they will have to have a look at their total product mix pricing strategy. Doing so will have the ...

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