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Alianza: pricing to enter the pension industry

Casos: Alianza: pricing to enter the pension industry

PABLO FARÍAS N.

2015 - Emerging Markets Case Studies Collection - ISSN: 2045-0621

Abstract

Subject area – The focus of the case is on the concepts of customer lifetime value (CLV) and customer equity (CE). Monitoring, measuring and maximizing CLV and CE have become a key priority for all marketers. Instructors can introduce these concepts and its key components.The main focus of the case is a quantitative assignment that asks students to analyze the convenience for the existing five AFPs (Administradora de Fondos de Pensiones, Pension Fund Administrator) of winning the tender. The use of CLV and CE measurements is particularly relevant. Students need to estimate the impact of pricing on the CLV and CE of the existing five AFPs.   Study level/applicability – BA, MSc, MBA Courses: CE, Marketing Metrics, Pricing. The case can also be used in courses that focus on Marketing Plan, Marketing Research or Services Marketing.   Case overview – In early 2009, Valentina Vial was given the assignment to develop the pricing strategy of Alianza to enter the pension industry. The company will propose a commission fee to compete with the country’s existing five AFPs. Whichever AFP presents the lowest commission will be awarded the tender. When there are several competitors, the company must guess each competitor’s likely pricing decision. In the analysis of the convenience for the existing five AFPs of winning the tender, the use of CLV and CE measurements is particularly relevant. Valentina Vial needed to estimate the impact of pricing on the CLV and CE of the existing five AFPs.   Expected learning outcomes – Understand the concepts of CLV and CE and the importance of maximizing a customer’s lifetime value for the firm by calculating the CLV and the CE based on a combination of financial and non-financial data.Illustrate the importance of adopting a long-term strategic perspective (using CLV and CE) in choosing a pricing strategy. Once a firm commits to a pricing strategy, it is difficult to shift course. Given this, the choice of pricing levels should be informed by long-term strategic thinking, including consideration of potential competitive pricing decisions.   Supplementary materials – Teaching Notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

Keywords

Pension industry, AFP, Chile, Pricing, CLV, Customer equity

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