e. An implementation and control procedure to translate the marketing plan into an action plan.
The best way of explaining relationship banking is to compare it to the more traditional approach to banking. This more traditional approach is variously called order-taking banking (Donnelly, Berry & Thompson, 1985, p. 112), and transaction banking (Moriarty, Kimball & Gay, 1983, p. 4). There are a number of points of comparison, of which the most significant are as follows:
Berry, L.L. (1989, August 31). Bank marketing, some lessons learned. American Banker, 4, 9.
g. Marketing factors, such as price and price deals, product quality, and service.
Cyrnak, A.W. (1986, April 11). Recent bank failures. FRBSF Weekly Letter, 1-3.
Profits do not occur, until all costs have been recovered. Some pricing policies are based on full cost recovery in all instances. The use of marginal cost-based pricing policies, however, often allows a firm to be more competitive in pricing, while still retaining a basis for the full recovery of costs over a specified level of output. Alternatively, marginal cost pricing can permit management to make effective decisions related to the use of excess production capacity. The danger to the firm in using marginal cost pricing in decisions involving the use of excess capacity is that illegal price discrimination may result. Such a risk is associated with relationship pricing. Thus, while the use of marginal cost pricing policies may be a valuable tool for management, care must be exercised in practice.