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Essay / Research Paper Abstract
Companies used to impose penalties when customers broke the rules in order to deter that type of behavior. In recent years companies have realized that they can make a profit from the leveraging of fees, just as they can make a profit from customers making bad decisions. This three page paper looks at the way in which companies can benefit from more breaking about decision-making and assesses the advantages and disadvantages of a company in pursuing this type of strategy.
Page Count:
3 pages (~225 words per page)
File: TS14_TEbreakr.rtf
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Unformatted sample text from the term paper:
was initially seen as a deterrent as companies sought to provide services which offered value and were attractive to customers. For example, the initial concept of a fee being charged
for customer who bounced a check was to discourage that type of behavior. However, the ability of a company to make a profit from leveraging penalties has the potential of
changing the way in which they are saying, moving from being a deterrent to being a potential source of revenue if they are exploited and in a competitive environment where
companies are seeking to maximize revenues it may be argued that there is a strong case to argue that there is a strong potential that some companies may be exporting
customers in order to create revenue sources. Therefore, it is quite possible for a company to benefit financially from a customer breaking the rules or making bad decisions. The potential
customers to make that decision, such as choosing the wrong price plan which does not offer the most value for their own usage pattern from a cellular telephone service provider,
or signing up to a contract which is too long also sources of revenue which are not based on the provision of a fair value service.
There are a large number of examples that demonstrate the way that companies can benefit from customers breaking the rules, credit cards not declining transactions that will
put customers over the credit limit is one example. If a customer goes over the credit limit the credit card company will charge them a penalty and there is also
likely to be a higher rate of interest attached to the amount of the credit limit. These can be very profitable for the credit card company. Although this may not
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