Global Marketing

Group Assignment No. 1 Alpen Bank: Laucnhing the credit card in Romania

Submitted By: y AnamTahir y Aruba Shareef y Hira Syed y MahamTanveer y WajeehaRiaz y ZainAsif BBA 2k7 B Submitted to:Ms Ayesha Pervaiz Submission date:15th October, 2010

it is seen that credit cards are somewhat stickier as compared to the developed countries. This shows that if Alpen positions its card as a high end product. 3) What are the economies of each customer? a) What is the breakeven number of customers? b) Is it available and in what time period? . Based on the attitudes of customers in other emerging economies it can be said that customers in middle-income class have a lower actual utilization rate when compared with affluent class. They are less price sensitive and more conscious of their image so positioning the card on high end would be beneficial for the bank. Moreover. including research. They also have a monthly income which supports them to have a credit card. marketing. it will gain a share of market which would stick to its card. This segment includes professionals who would like to purchase products and services through credit card considering it a status symbol. for countries like Romania. The middle class also has a huge potential especially in terms of the size of market however they are more price-focused and would only welcome this new credit card if the interest rates are low. 2) What is the cost of acquisition of customer? Customer acquisition cost is the cost associated with convincing a consumer to buy your product or service.1) How should Alpen Bank position its card? Alpen bank should position its credit card as a high end premium product as its existing customers belong to the affluent class and it would be easier to establish itself in this segment. Furthermore this class represents the top 10 % of population which has about 24% of wealth. The cost of new customer acquisition is one of the best ways to measure sales and marketing performance. and advertising costs.

This would enhance their customer base as compared to core banking. They are conscious about their social image and are less sensitive to prices. Marketing and RnD departments would require effective implementation of marketing techniques and research respectively to make credit card a big success. On the other hand.4) Should Alpen Bank launch a credit card? Why? And how does the credit card opportunity tocore business operations? Considering the economic and market conditions as explained in the case. The rapid economic growth has led to higher incomes which has increased the proportion of middle class in the economy. More specialized people will be required who have the knowledge about credit card s operations and how to handle them properly. This would also cost them in the beginning as customers need awareness but as the market would grow it will become a profitable business. Romania has ATMs and point of sales terminals for card transactions too. People use cards generally for withdrawing cash rather than for buying products or services so there is less revenue driven from transactions. majority of the cards being used by customers are debit cards which means Alpen has to convince and make special efforts to make use credit cards too.5 million cards were being used in the market. These factors . Firstly. Moreover disposable income is also increasing dramatically. Economy is growing rapidly with increasing incomes and making upper middle and middle class a substantial part of the society. The credit and debit card market of Romania is also seen to grow at a good pace of 35% in 2006 and about 9. Even merchants are still ignorant in accepting credit cards and prefer payments through cash. These all points show that Alpen has an opportunity to cash on the credit card but it would require efforts especially in marketing the card and making people realize the utility and purposefulness of the card. there are some problems in the credit card market too. Today s middle class may become affluent tomorrow. 5) Is Romania ready for cash-free transactions? The macro-economic in Romania are encouraging businesses to expand and explore new possibilities. The country has 10%households who have 24% of the wealth so they have sufficient income per month. Alpen should launch a credit card. The middle class is also a potential market for the credit card. This class includes young professionals who make price driven decisions so the bank might think about lowering the interest rates for them.

However the majority of these cards are debit cards used for the purpose of withdrawing cash rather than making credit purchases using credit cards which could be a concern for the Alpen bank. Furthermore the actual usage rates for these credit cards are very low which indicates that at present customers do not use credit cards as a prime means of making purchases. They are career oriented. In recent years Romania has experienced a significant growth in the number of financial cards. This growth is also matched by an increase in the number of ATMs and point of sale terminals as Romania has 8. As the Growth in total financial cards including debit and credit cards grew by 35%.000 ATMs and 150. So Romania offers a huge potential of becoming a cash-free transactions but at present it is not ready for cash-free transactions. Romania also has an affluent class which is status conscious and has greater purchasing power. active professionals who would like to use their cards frequently for making purchases.have also led to an increase in the disposable income of people which means that the Romanians now have more money to spend. Based on the above mentioned factors it can be concluded that as Romania has also become one of the emerging markets therefore it is shifting towards new trends and Romanians especially the affluent ones are more status conscious and consider the usage of credit cards a status symbol. .000 point of sale terminals.

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