Optimization of the Ratio of the Bank Payment Cards Price and Quality

摘要

The present paper expands the price and quality ratio concept in respect of the consumer and producer expectation gap having generalized the findings and conclusions of the research conducted during past years. It has been noticed that when placing a new product on the market, most often the expectation gap is specifically wide and tends to considerably decrease in the course of time. For the purpose of the present research paper the author has chosen an unconventional product - the bank payment cards whose quality is defined in terms of the number of the elements embedded in the card, and the quality level of each element has been scored in points. From the consumer's point of view the price of a card corresponds to its quality although this assumption has not been confirmed by any actual data available. The sharp increase in the number and volumes of payment operations using payment cards is a direct representation of the need by the customers to use payment cards on a wider scale. In Lithuania this increase in the demand for payment cards is growing, so research in the area of price and quality of the payment card is topical. A number of empirical surveys have shown that the quality of the product may be efficiently enhanced without increasing its price, and, by applying optimization methods, even reducing its price. The increase or decrease in the price shall be interpreted as the product quality enhancement costs. The model developed to determine the product price-quality ratio is illustrated on the basis of the MasterCard payment card while identifying the specific limits of the costs incurred in relation to quality enhancement. The present paper is dedicated to the survey of the cards that after having attained their highest quality point acquires the same quality, as no further enhancement of the quality is possible in respect of such cards. The highest quality in respect of each individual card is related to different costs. Following a logical path of thinking, the price and quality ratio could be computed by working out an optimization problem, since, as a rule, it is the costs, rather than the quality that have to be limited. Most elements of the payment cards are not assigned the highest score which implies that any enhancement of their quality will require additional expenses the amount whereof shall be proportional to the quality sought. This, however, does not mean that quality costs in all cases. For instance, MasterCard issued by the bank in Lithuania currently costs LTL 25, and according to the calculations related to the highest quality of the card, it would cost LTL 24.75. This allows an assumption that without reducing the price of the card, the card may be considerably improved, since its initial quality was 0.90 points, and would result at 1.80 points when based on the calculations related to the highest quality. This is a double quality for a price LTL 0.25 less. This can be explained with reference to a high initial price of the Visa GOLD card, which only provides additional evidence that no significant investment is required in order to attain the highest quality. This conclusion, however, is valid only for the cards with high initial price, or the cards that contain just few elements requiring improvement. Any further increase in the costs is considered inexpedient in view of the absence of any quality enhancement reserve. This article consists of five parts, starting with the introduction where the novelty, the problem of the research, the purpose of the research and the research methods are described.