case study : La Poste: Pricing Banking Services

La Poste began as the government-owned postal service provider to citizens of France. It has become one of the top three logistics, corporate services, and financial providers in Europe, behind Germany's Deutsche Post and ahead of the United Kingdom's Concordia. The company, which is now independently operated, holds the number three position for electronic mail services in Europe, the number three spot in the European parcels and logistics sector, and one of the top positions in the French financial services market. These activities combined to produce more than 17 billion in 2001. Among the company's assets is its network of more than 17,000 post offices, which provide mail services, financial services, and Internet access and email services throughout France. The company offers all major banking services, including checking and savings accounts, debit cards, credit cards, online banking, automatic transfers and savings programs, sales and purchases of common stock in France and other countries, domestic and international money orders, and international banking services, including currency exchanges. The strength of La Poste has been its operations in Europe, most notably France, Germany, and the United Kingdom. In France, patrons enjoy the convenience of taking care of post office needs and banking activities in the same location. Recently, however, company leaders have discussed the possibility of expansion into other French-speaking nations. Two possibilities emerge. First, La Poste could seek to enter Canada or other developed countries in which both English and French are spoken. Citizens and potential patrons would be more affluent and would be familiar with the large range of banking services normally offered by financial institutions. The primary impediment would be competition. Consumers would have no vested interest in trusting their money to a foreign bank. Consequently, price would become an important consideration. To encourage customers to open accounts, La Poste would expect to offer discounts on some services combined with any potential advantages the bank could offer. The second type of expansion includes less-developed Francophone countries such as Haiti, Cameroon, and the Democratic Republic of Congo. These nations experience high levels of poverty and unemployment. Investments may be considered more risky. Additional opportunities also exist, most notably in the area of microfinancing, in which a small investment is provided to a local entrepreneur starting a small-scale business, such as making soap to sell in the local marketplace. Among the advantages of microfinancing are high levels of repayment at profitable rates plus considerable favorable publicity both in the nation involved and in the home country of France. La Poste's marketing team notes that the company would not enjoy the advantage of providing mail service combined with banking in either type of location. Canada has a well-developed postal system. While less- or least-developed nations have poorer systems, their individual governments would undoubtedly be protective of these interests. The potential would exist to provide Internet access and email stations for patrons in those situations. It might also be possible to establish package-delivery programs in both circumstances, as long as these did not conflict with governmental interests and protections. Canada would pose stronger competitive threats, whereas Haiti and Cameroon would have less-developed roads and mapping systems and so other companies would pose less of a threat. The final alternative available to La Poste would be to seek further expansion in European countries. About 21% of the population of Switzerland speaks French, for example. Other elements of culture may be similar to what is present in France. Clearly the marketing and management teams had a great deal to consider as the company formerly known as Socit Gnrale (the General Society) moves forward into a new era.

Discussion Questions

1.If the company begins operations in Canada, which type of pricing system would be most viable: that based on cost, supply/demand, competition, or profit? 2.In Canada, would any type of discounting program work? If so, which methods? 3.In Canada, would loss leader tactics be advisable? How would they be delivered? 4.If the company commences operations in Haiti or Cameroon, which type of pricing system would be best: that based on cost, supply/demand, competition, or profit? 5.In the Democratic Republic of Congo, would any type of discounting program work? If so, which one? 6.Which situation should the marketing and management teams from La Poste choose? Why?