For many years banks designed their promotional efforts to aim at the broadest possible markets in hopes of recruiting new clients. Recently, competitive measures have forced them to focus instead on a strategy of market segmentation designed to sell specific products to markets that present the best present and future opportunity for profit. Consequently, banks have begun developing marketing strategies similar to those of the retail industry. In one large Canadian bank, a new marketing approach called the "street-corner strategy" was proposed for selling the right product to the right client. However questions remain unanswered. What kinds of clients do banks want? Which products should they sell them? This article proposes a model enabling bankers to find the market-mix that will maximize profits, under the constraints of feasible marketing strategy, competition, and the effects of changing interest rates. We have designed a deterministic optimization model that quickly finds a solution that maximizes bank profits while respecting operational constraints. The model was tested on the data for the province of Québec and it yielded potential profit increase of 25% for a three year period. This model can be used to help marketing departments assess their constraints, to evaluate changes in product costs, and to adjust their strategies to increase profitability.
Paru en juin 1998 , 22 pages