Marketing: An Introduction (13th Edition)
Marketing: An Introduction (13th Edition)
13th Edition
ISBN: 9780134149530
Author: Gary Armstrong, Philip Kotler
Publisher: PEARSON
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Chapter 16, Problem 16.12MA
Summary Introduction

Case summary:

Company K provides a lease-to-own program that targets the consumers with low-income. Company K is a retailer company, however, few company like Company K has been doing this program for few days. Company S, which has already launched this program mentioned that their program satisfies the low-income consumers.

Few critics aroused saying that it is just giving instant satisfaction and exploiting the disadvantaged customers.

Characters in given case:

  • Company K
  • Company s

To discuss: How few financial institutions are attempting to meet the requirement of “unbanked consumers”

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Kmart offers a lease-to-own program targeted to low-income consumers and is taking some heat over it. Rent-to-own is not new— chains such as Aaron’s and Rent-A-Center have been around for years—but it is new that a mainstream retailer has moved into this market. Kmart’s parent corporation, Sears Holdings, launched a similar program, and according to a company executive, it is satisfying the unmet needs of new customers. Some critics say that it is just encouraging instant gratification and exploiting disadvantaged consumers. These types of customers don’t qualify for credit and don’t have enough cash to purchase desired products outright, such as televisions and other big-ticket items. However, a $300 TV purchased through Kmart’s program ends up costing consumers $415 if purchased at the end of the lease. If customers make just minimum payments over the course of the lease, one expert calculated, that it is equivalent to charging a 117 percent annual interest rate. Sears spokespeople…
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