Global Economic Crisis

Demographic Dimensions

Geographic region – Pacific, New England, South Atlantic, Mid-West, etc.
City, County, or SMSA (size) – under 5,000, 5,000-9,999, 10,000-14,999 etc.
Age—infant, under 6, 6-11, 12-17, 18-24, 25-34, 35-49, 50-64, 65 and over.
Sex—male, female
Family size—1-2, 3-4, 5 and over.
Family life cycle—young, single; married, no children; young, married with youngest child under 6; young, married with children; older, married with no children; older single; other.
Income—Under $5,000, $5,000 read more »

The new product manager for a regional bank located in Memphis, Tennessee, found that a recent study of the Memphis metro area indicated that 45 percent of the sample expressed interest in purchasing an asset management account during the next year. The product manager found from recently published census data that there are currently 10,500 households that would qualify as targeted customers for the new product. read more »

Please read the following description of a new banking product we are thinking about offering in the near future. After you have read it and understood it, please answer the following questions.

Are there any features about the product you just read about that you find hard to believe?

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Extent to which the concept is realistic attempts to capture a similar perception as the credibility dimension. Consumers are used to being disappointed with product promises that raise their expectations but in actuality do not deliver. To the extent that the concept is believable and realistic, consumer reactions should be more positive.

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Usefulness of the concept is an allied dimension. Do the targeted consumers perceive the concept as useful? If not, there is little likelihood that the product will succeed in its present form. A key concern here is that if it is not perceived as being useful, can it be made to be more useful?
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1. A brokerage service through which you can make stock, bonds, etc, transactions
2. The service does not recommend securities or provide advice on market conditions
3. Services
Completing transactions
Providing stock market information
You can use your checking account for transactions
Monthly statement
Margin account – this allows you to borrow against the value of your securities.
4. Brokerage fees are 50 percent to 70 percent less than full-services brokerage fees

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Money Market Checking ($2,500 Minimum Balance)
1. You can write an unlimited number of checks
2. Your can make transactions
in person
by phone
by mail
by an instant cash card (ATM card)
3. Your interest earning s are tied to money market rates
4. FDIC insured
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Our preference is, where possible and economically feasible, to use the product test marketing approach prior to introducing the product to the full market. We favor this approach not only in terms of ultimate cost to the bank but also because it enables the bank to evaluate true market responses to the product. In this way the various manipulations in the marketing mix may be considered. Up to this point, market responses have necessarily been limited to the product concept. Thus, this approach also lets the bank know what competitive reactions are likely to be.

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Bankers should make a concerted effort to move their organizations toward the organic orientation insofar as new product development activities are concerned. While we do not suggest that banks abandon their efforts to develop a higher degree of operational efficiency, we do suggest that the typical bank structure does not support the new product development framework as outlined in this text. read more »

Organizations with a mechanistic orientation need to favor vertical specialization and control. This stresses rules, policies, procedures, and specific techniques for decision making, and it develops elaborate and well-documented control systems backed by centralized staff. read more »

We have introduced the notion that the field of play had changed and is continuing to change for banking at an increasing pace. Further, we have indicated that, too often, current banking structures serve to inhibit the type of responses necessary to survive and prosper in times of fast-paced environmental change. read more »

While the concept of innovation diffusion focuses on markets and the acceptance of new products by aggregates, the adoption process has as its focus the individual and the process by which s/he moves from awareness of the new product to full-scale usage of it. The implications of the adoption process are that the promotional message must change in order to accomplish different adoption objectives on the part of the individual.

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The decisions management makes one each of these five issues leads to the formulation of a structure that will hopefully facilitate achievement of purpose. No two banks need to address all five issues in the same way for each to perform well. Consider a bank that has loosely defined job descriptions, wide spans of control, considerable departmentalization, and decentralized authority. read more »

This information can be used to set prices for individual component products, predicated on a first-year penetration of 300 accounts at $120 or 250 accounts at $360. The three-step procedure that follows shows how the prices can be established to reach a break-even situation.

STEP ONE: Calculate revenue surplus or deficit at $120 annual maintenance fee with a market potential of 3000 accounts and a penetration rate of 10 percent (300 accounts).
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The First National Bank & Trust Company, a $5 billion bank, was examining the viability of the concept of an asset management account as part of its product mix. Concept tests suggested significant market acceptance and potential for the concept. The concept was tested with two different annual maintenance fees: $120 and $360. The component services of the AMA included:
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Another organizational structure is the committee, usually a group with heavy support and representation from top management. Members of the new product planning committee usually include representatives from all major functional areas—marketing, administration, personnel, lending, trust, and so on. After a product has successfully passed through the introductory stages of development, the marketing and management responsibility is taken over by another organizational unit—possibly a product manager or a new product department.
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The strategy of an organization has been defined as a two-part process: (1) determination of the basic long-term goals and objectives of an organization and (2) the adoption of courses of action and the allocation of resources necessary for carrying out these goals. Strategy is the pattern of decisions that shapes and reveals an organization’s objectives, purposes and goals, produces the principal policies and plans for goal attainment, and defines the business in which the organization plans to engage. A statement of strategy will generally characterize the product line and services offered, the markets and market segments to be served, and the delivery systems to reach those markets. Strategic direction is a top management function. Top management must set the course of future product-market match-ups and set the direction of the bank.
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