Price Bundling in the Student Banking Market

Abstract

Banks in New Zealand have been putting substantial efforts into trying to attract and retain tertiary student customers for a number of years. A popular marketing strategy is price bundling, in which two or more products and services are offered at the same time at a discount. This paper reports on a study into the attitudes of New Zealand tertiary students towards the bank price bundling strategy, and to what extent this strategy assists with the retention of student customers.

Most respondents had a student bank account and the results showed generally positive attitudes among tertiary students toward the bank packages that were offered by banks in New Zealand. A relatively low defection rate was found in this study. It appeared to be their satisfaction, especially their satisfaction with banks and service channels, which contributed to their loyalty (or non-defection) rather than switching barriers.

Keywords: Student banking, Customer retention, Price bundling, New Zealand, Survey

JEL Classification: M31, G21