Lesson 2: Pricing - Calculating the Better Price Example 3


EXAMPLE 3

A bank advertisement states that if a person comes in to the bank and opens a new savings account, they will receive four free movie passes.

Consider the following questions:

How is the promotion good for the customer?
How is the promotion bad for the customer?
How is the promotion good for the bank? What might be some drawbacks for the bank?

Solution: Customer Perspective


  • The customer gets a good deal because they get four free movie passes for just opening the account.
  • Sometimes free passes have expiry dates, so the customer might not get to use them before they expire.
  • If the customer likes to go to movies, then the promotion is good.
  • The customer may not live close to a movie theatre.
  • Maybe the bank is not a very good one, and the customer would have better service at another bank.
  • The bank may charge more in service charges to make money to pay for the items that are being given away.

Solution: Bank Perspective


  • The bank is bringing in new customers by offering enjoyable free items. More customers is a good thing.
  • It may not be good for the bank if it costs a lot for the free gifts. However, the bank may get a deal from the movie theatre.
  • The bank would have to make money from the customers to make up for buying the movie passes, and then giving them away.
  • They may get so many new customers that they run out of the free movie tickets. The new customers might get upset because they don't get the free items and tell friends the bad news.


Now, it is your turn! Complete the questions in your Chapter 2, Lesson 2 Practice that refer to Calculating The Better Sales Promotion.



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