GMAT - Graduate Management Admission Test

�We believe that improved customer service is the best way for us to differentiate ourselves from competitors and attract new customers. We can offer our customers better service by reducing waiting time in teller lines from an average of six minutes to an average of three. By opening for business at 8:30 instead of 9:00, and by remaining open for an additional hour beyond our current closing time, we will be better able to accommodate the busy schedules of our customers. These changes will enhance our bank�s image as the most customer-friendly bank in town and give us the edge over our competition.�

Discuss how well reasoned... etc.

The customer-service division of Mammon Savings and Loan recommends that the best way for the bank to attract new customers and differentiate itself from its competitors is to improve its service to customers�specifically, by reducing waiting time in teller lines, opening for business 30 minutes earlier, and closing an hour later. These improvements, it is argued, will give the bank the edge over its competitors and make it appear more customer-friendly. For the most part this recommendation is well-reasoned; a few concerns must be addressed, however.

First, the author assumes that Mammon�s competitors are similar to Mammon in all respects other than the ones listed. In fact, Mammon�s competitors may be more conveniently located to customers, or offer other services or products on more attractive terms than Mammon. If so, Mammon may not gain the edge it seeks merely by enhancing certain services.

Secondly, the author assumes that the proposed improvements will sufficiently distinguish Mammon from its competitors. This is not necessarily the case. Mammon�s competitors may already offer, or may plan to offer, essentially the same customer-service features as those Mammon proposes for itself. If so, Mammon may not gain the edge it seeks merely by enhancing these services.

Thirdly, the author assumes that Mammon can offer these improved services without sacrificing any other current features that attract customers. In fact, Mammon may have to cut back other services or offer accounts on less attractive terms, all to compensate for the additional costs associated with the proposed improvements. By rendering its other features less attractive to customers, Mammon may not attain the competitive edge it seeks.

In conclusion, Mammon�s plan for attracting new customers and differentiating itself from its competitors is only modestly convincing. While improvements in customer service generally tend to enhance competitiveness, it is questionable whether the specific improvements advocated in the recommendation are broad enough to be effective.