Second Semester Supplementary Final Examination 2012
MARKETING FOR FINANCIAL SERVICES
Writing period: 2 Hours duration
Study period: 15 Minutes duration
Permitted materials: No restrictions
The exam consists of two sections – Section 1 contains a short case study and a question related to the case study. This section is compulsory – all students must answer this question. Your answer to this question is worth 50% of the total marks for the exam.
If you do not provide an answer to the compulsory question in Section 1 you will not be eligible for the 50% of marks allocated for this question (i.e. providing extra answers to questions from ...view middle of the document...
This is good news for small to medium enterprises, who can bargain with their banks for a better loan deal.
“Certainly if a bank has an appetite for someone they'll try and win that business,” says Tim Werner, the NSW manager of business loan broker Berkeley Capital Partners. “It's one of those marketplaces at the moment where all the banks are saying they'll do things for what they call 'the right customer', so if you're one of those customers you can certainly negotiate pretty good deals with the banks.”
The right customers are solid trading businesses that have been operating for several years, with good turnover and profits. “The banks are really falling over themselves to help them out,” says Werner.
While banks are competing for good customers they have also tightened up their lending criteria in the wake of the global financial crisis, which means risky businesses will find it more difficult to get finance.
The more money a business borrows, the greater its bargaining power. The banks are less prepared to bargain for loans of under $1 million, says Werner. Loans of over $1 million tend to be handled by a different part of the bank and bargains can be made. Banks start competing very strongly once the loan amount climbs above $3 million.
“It's almost a tender process in that space in terms of dealing with the banks,” Werner says. “We certainly talk to most of the banks about the deal and get them to put their best offer on the table. You need to do that just to see what's on offer.”
Question 1 (50 Marks)
Imagine that you work for the major Australian retail bank NAB. Assume that NAB are seeking to increase their market share in the small to medium sized enterprises market discussed in the article. In particular NAB wants to grow the number of loans that they arrange with the ‘right customers’ outlined in the article and specifically the loans of $1-3 Million where the article suggests that ‘bargains can be made’.
Based on a detailed application of models, frameworks and concepts taught in the course to the information contained in the article above, recommend an effective Pricing strategy to support NAB’s strategy to grow their market share in the small-medium sized enterprises market. In your recommended Pricing strategy make sure that you address how NAB should use pricing to address fluctuations that may happen where demand and supply of loans are mis-matched (for example how should price be managed when there is more demand than available credit, or how should price respond if demand is low and credit is available?)
SECTION 2 – You must answer two questions from this section. All questions are of equal value (25 marks) and you should answer only two questions. If you answer more than two questions from this section only the first two questions (in numerical order) will be marked. This section represents 50% of the total marks available for the exam (25 marks per question).
Question 2 (25...