Target costing & service organization Essay
I feel that target costing can be applied to the banking industry. Financial institutes offer a wide range of services to the public that can be developed to fit specific needs or cultivated around the design. Regions bank offers Visa cards to both consumers and businesses. These operate as debit cards for their existing accounts.
Target costing could be used to add features such as credit-debit linking to their account. Consumers, including businesses, in good standing should have the opportunity to borrow money when needed without going through a hassle. The banks should research and qualify their current customers through a process that would allow them to convert from credit to debit as needed.Through target costing the bank is using a less traditional approach to establishing or introducing their product to the market.
Regions could easily determine what competitors are charging on percentage rates for credit and relate that to their already qualified customer medium credit score. This will allow them to come up with a fair rate to impose. Regions should allow room for fluctuation on the best or worse clients. This could help insure that the new credit-debit card system is profitable and they are not losing more than they are spending.When benchmarking, Regions need to look at both the cost and control quantities of possible applicants. They are able to build models that can give them an ideal of long term growth with these clients. This is an instant form of service with predetermined rates for special target market within their customer ranges.
I would recommend that they congregate with other financial institutes with similar interest and success rates such as Suntrust and Bank of America.They should compare interest rates, late fee, and finance charges to the national average as well. General information would prove to be more useful since the institute will need to establish itself that target area before relying on concrete data elsewhere.ReferencesCooper, Robin (1997) Marketing—Planning; Boston Butterworth-Heinemann. ISBN: 9780750698283Kaplan, Robert S (1998) Activity-Based Costing. Boston Harvard Business School Press, ISBN: 9780585351216