Students, persons who began to work, adults who are preparing for marriage
Young people, who formed a family (25-30 years)
People buying homes and consumer durables (first time), people with a career, but with limited finances.
The problem, improvement of housing conditions, ensuring the financialsecurity of the family, providing education to children
Individuals 'mature age' (40-55 years)
An increase in revenue as the decrease in financial liabilities. Purpose - PlanningInsurance and Pensions
Individuals preparing for retirement (55 years or more)
Those, who have accumulated capital seeking to preserve it and provide a realsustainable income
* Lancing J. B., Morgan J.N. «Life cycle and consumers financial capacity» 1971, page 48.
II. Dentification and analysis of competitors' activities.
For this purpose:
• Identify potential and actual competitors in each market segment, banks produce services substitutes in the segment. These include banks and banking institutions that provide services-analogues in the same market segments, banking institutions serving the markets of other services, which are analogous to the invasion and this market is highly probable;
• group the banks competitors;
• Conduct operational and prospective analysis of the competition.
Pricing policy is addressing question about the prices of deposit services for content management of the banks faced with an old dilemma: Banks should ensure that interest income high enough to attract customers and content of deposits, but also to avoid too high interest rates, which can absorb any profits derived from the use of funds from the deposit. Stiff competition for deposits complicates the solution of this problem, because competition leads to higher interest costs on deposits and also reduces the expected profit from the trafficking of borrowed funds. The market, rather than a separate bank ultimately determines the level of prices. In this regard, the bank's management must decide whether it wants to attract more deposits and keep them all at the present time, offering to investors, at least, a market price, or whether it wants to get rid of deposits by offering deposit customers at below-market conditions. Managing banks often have to choose between growth and profitability. The determining factor in setting the interest rate on time deposits (deposits) is the term for which funds are placed: the long term, the higher the level of interest. An equally important factor is the amount of the deposit, and, consequently, the larger the amount of deposit and long term storage, the higher the interest rate on it. The essential point is the frequency of payment of income on deposits (deposits). The interest rate on the deposit is in inverse proportion to the frequency of payment of income, that is, the less often they are implemented, the higher the level set by the bank interest rate on the deposit (the deposit). Payment of interest on the deposit (deposit) can be made:
• A monthly basis;
• Once a quarter;
• Upon termination of the contract.
In order to encourage involvement in the term deposits in the bank clients' funds in deposits (deposits) may provide for the capitalization of interest. It is possible if the bank when calculating the income of the technique of compound interest (interest on interest). In the world of banking practice, there are various methods of pricing on deposits, propose to consider some of them / 17 /. Education pricing for deposits is measured by the method of «cost plus profit." The idea of paying customers the full cost of servicing deposits not universally accepted by banks. In fact that during the 60s hailed as a sensible innovation is the idea that customers should receive more free services. This is consistent with the growing demands from other financial intermediaries, who captured the traditional markets of banks and divert significant amounts of bank deposits. Soon, however, many banks began to wonder about the wisdom of a new marketing strategy, as they swept over the flow of many small, low-cost deposits, which have inflated operating costs of banks. Thus the price of services can be divided into components as follows:
Pricing scheme by the method of: "Cost plus profit."
Operating costs per unit of service for deposits
Unit price for the customer service for each type of deposit
Expected overhead for all types of operations with deposits
Projected income for each service on deposits
*Source: Peter Rose. Bank marketing – 1997
Source: Table is compiled by the author based on a study of factors affecting the development of the deposit market
The relationship between price and cost of bank deposits, as shown by the above formula that allows banks to more accurately match the price and costs and limit the amount of many formerly free services. Pricing by the method of "cost plus profit" requires a precise calculation of the cost of each service on deposits. How can I do? One of the most widely used methods is discussed, and Marx and Simonson Edmisterom is the calculation of the prices of deposit based on the costs of the bank.
Bank needs to: 1) to calculate the overhead rate for each source of funds of the bank (including the reserves required by the central bank, deposit insurance premiums), 2) multiply each rate overhead of the relative value of the bank received from each source, and 3) summarize the the values obtained to determine the weighted average cost of funds of the bank. This method, the so-called common fund of funds based on the assumption that there is no cost of bleaching type of deposit, as such, but rather a weighted average value of all financial resources of the bank. Setting an interest rate on deposits of limited costs: Many financial experts have come to a consensus that, where possible, to determine the price of deposits should not be used average and marginal cost, ie, the additional costs associated with new facilities.The reason is that frequent changes in interest rates make the value of average costs of unreliable and unrealistic basis for the pricing of deposits. For example, if interest rates fall, the additional (marginal) costs of obtaining new funds may fall below average costs for all funds collected by the bank. The values that we need to know to use this method as follows:
Marginal cost = Change in total cost = interest rate X New All funds received under the new rate - the interest rate X Old All funds received under the old rate
Pricing by the method of marginal cost gives the banks managing valuable information not only about the interest rates on deposits, but also that, up to what point the bank can expand its deposit base, before the additional costs of growth of deposits will lead to a decrease in additional income and comprehensive income. The establishment of interest on deposits is made in order to ensure market penetration. One method of pricing, which allows you to not take into account profit margins and costs of the bank, at least in the short- term, is to establish the interest rate on deposits in order to ensure market penetration. The idea is to offer high interest rates (usually higher than market levels) or to set low rates of commission rates to attract as many new customers.Guidelines in this case, hoping that a larger volume of deposits and, consequently, a greater volume of loans the bank compensates the decrease in profits. Pricing according to the method of market penetration is a strategy that exists mainly in the period of rapid growth of markets, most of which the bank hopes to win. The point of this method reveals the concept proposed by Flannery, who argues that keeping the accounts in the banks is expensive for most investors. In addition, clients usually do not enjoy the same service bank. Deposit accounts determine the presence of established relationships between the customer and the bank, which usually expand at the conclusion of agreements on loans, performing trust services, etc. If a bank can offer the investor rate of return above the market long enough to get his input, high costs,associated with the transfer of this deposit to another bank, the depositor will cause the bank to tolerate, even if they are installed less generous interest rates on deposits.
The differentiation of tariffs for individual investors: Fierce competition has led to the widespread use of tariff of fees for deposits. Many economists refer to this transition in pricing depending on the conditions, since banks set the scale of prices for services for which customers are charged a low fee or no fee at all, if the balances on their accounts exceed a certain minimum level, but clients pay for services at a high rate, if average balance falls below this level. Thus, the client pays for services, depending on how it uses its own contribution. Pricing, aimed at attracting new customers with higher incomes. Many banks especially in large cities, are widely used, this method of pricing. They use well-prepared advertising program for practicing professionals (ie doctors and lawyers), businessmen, managers and other high-income citizens to familiarize themselves with the services and prices for services that, ultimately, bringing the bank more profits. As a rule, the strategy of pricing above average is tied to the strategic program of the bank, in which each client is assigned to wealthy individual employees of the bank, which conducts all the affairs of the client's bank. Pricing of deposit based on the number of services provided to clients (multivariate method for pricing). A multivariate method is based on consolidating the bank's best customers, and determining the price of deposits in accordance with the quantity and quality of services provided to each client. Customers who buy two or more banking services can be encouraged by lower service rates or deferred payments, compared with customers who have limited communication with the bank. The idea is that by buying a large number of banking services, the customer becomes more dependent on the bank. Thus, in theory at least, the pricing on the basis of customer relationships with the bank provides greater customer loyalty is almost independent of the level of interest rates offered on deposits, or the prices of other competing banking financial companies. In recent years, banks have realized that the price of deposits can be used to form a sort of portfolio of clients for each type of service the bank. As noted by Edmister, changes in the prices of deposit not only increases the difference between lending and deposit rates, but also affects the composition and structure of customer deposits, which, in turn, determine the strategy and profit /17/.
Service policy: Service policy of the bank covers the development of solutions related to customer choice. To develop service policy management of the bank to analyze its main types and choose the best for a particular customer and the market, outline the scope of services offered, and solve a lot of organizational issues that arise during its implementation, ie develop strategies in service. Personnel policy of any bank should be aimed at improving human resources management, providing joint efforts to achieve collective goals. Need to develop the concept of working with staff, which would meet modern requirements. It should be aimed at improving the effectiveness of the prescribed functions through the efficient use of intellectual and personal capabilities of personnel, elimination of duplication of functions and reduction of other costs, scientific and methodological support of labor, its maximum computerization, and creation of necessary industrial and social conditions for staff.
Advertising policy: Advertising products, including the Bank, related to the producer-guided contacts with potential clients and partners. Advertising policy is a combination of all the activities of banking institutions, which are carried out to conquer new markets, increasing sales of services, enhance the credibility of the bank and eventually leads him to carry out long-term and short-term goals. The objectives of the advertising policy of the bank are in the market introduction of new services, new markets, expanding the knowledge of actual and potential customers of banks and a set of services available to them, creating a positive image of the service itself, pre-existing interest in the bank's existing services, strengthening the existing demand, creation of informal ties between banks and their regular customers, information about the change of conditions of service, which sometimes leads to a change in their prices, or other aspects of their implementation. Banks may use advertising in newspapers and magazines, on radio and television, various types of urban advertising (billboards with pictures and light), advertising by mail - the address and unaddressed - in the form of press releases, annual reports, traditional newsletters, catalogs, leaflets and brochures, exhibitions, public relations, advertising all sorts of gifts, selection of advertising slogans or motto of the bank, as well as other non-traditional advertising. To raise funds on deposit in commercial banks have been widely used international experience - in particular, they carry: the development of various programs to raise public funds, providing clients - investors a variety of services, including banking and nature (eg elements of health care; subscriptions to periodicals Publication of Economic Literature, issuing tickets for the excursions to museums, etc.), conducting a wide open advertising to attract customers, the use of "quiet" targeted advertising, the use of high interest rates on deposits of the investment nature of the payment of premiums at the end of the deposit; payment regular premiums to investors "for their loyalty to the bank." In addition to flexible interest rate policy in order to raise funds banks are required to create their depositors guarantee the reliability of the premises of the deposits. To ensure the protection of investors, depositors and the submission of the guarantee of compensation in case of bankruptcy, banks should establish a centralized and a decentralized manner, special deposit insurance funds. In addition to the deposit insurance, it is important for investors are the availability of information on the activities of commercial banks and the guarantees that they can give. When deciding on the location of its existing available funds, each lender must have sufficient information about the financial condition of the bank to assess the most risk of future investments. This invaluable aid to depositors, investors may have ratings of banks by special agencies, bureaus.