Price as a determinant to Customer Satisfaction and Customer Retention in Malaysia Commercial Banks

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Chim Weng Kong, Maria Abdul Rahman

Abstract

Customers are the main source of revenue for the organization to grow and remain competitive in the market. Attracting new customers is no longer the main objective but customer retention is. Unless the business organization owner is not interested in growing the business, customers are not important anymore to the organization. Customer retention strategy has been in the mind of different business industries decades ago even in the banking industry. Other business industries aware of the benefits of customer retention where it provides a stream of income back to the firm and price will be the sole contributors to generate revenue.


Price has a direct effect on the bank’s revenue and the operating cost can bring down the profit. If the banks set too high of the pricing, existing customers may choose to move to competitors and at the same time, banks will not able to attract new customers. Changes in customer’s demography in terms of income and educational background may possibly change the way customers look at pricing. If the customers notice that a competitor is offering a better price for the same product, the bank could lose the customer permanently. The notion of marketing specified that in order to achieve success, the organization should identify the needs and wants of customers to achieve customers’ satisfaction where competitors will not able to compete.

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