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DEMO CASE

Credit Card company is facing intense competition in the industry. What would you recommend for it
to survive.

Ans.
Given statement: Credit Card Company is facing intense competition in the
industry
What must be delivered: Suggestions to survive, sustain.
Key points to look at:

Current market share, market size, trend of change in market


No. of competitors, difference in the competitors product
Competitive advantages by competitors
Current business operating model+ Revenue source
Competitors operating model+ Revenue source
Possible reasons for poor market share
Recommendations
Conclusion

CURRENT MARKET SHARE:


Let us assume that there are 3 key competitors.
Clients market share is 20%

Each other competitor has an approximate 35% market share.


Let remaining 10% be the market share of others.
HAS THE MARKET SIZE INCREASED OR REMAINED SAME?
If the market size has increased, that means our number of customers hasnt
increased in proportion to the increase in market size, which would imply that
new customers are preferring the competitors services.
If the market size has remained same, it would imply that we are losing
customers (assuming that other banks are either gaining or retaining the
same no. of customers)
We will explore possible reasons for both.
IS HISTORY OF MARKET SHARE KNOWN?
If market share has decreased, then looking at the trend of decrease
vis--vis any probable increase in cost to customer, we can identify
cost related reasons for customers to be switching over to the new
players.

WHO ARE OUR COMPETITORS?


ABC and XYZ are our prime competitors.
HOW ARE THEIR PRODUCTS DIFFERENT?
Their products (credit cards) are
1. Cheaper to subscribe for?
A. Yes, they are marginally cheaper, but the different is not significant
(say)
2. Have a lesser interest rate for default on payment?

A. Yes, they have a lesser rate of interest. While we charge 12%, they
charge 9-10%
3. Have a softer penalty in case customer fails to pay back?
A. No, they do not have a softer penalty.
4. Have an easier process for securing access to credit cards?
A. Yes, customers can walk in, apply online, or send a contact request.
Their sales rep visits the customer and helps them with the
application process.
5. Offer miscellaneous services like discount on fuel surcharge, POS
discounts etc.
A. Yes, they provide more such offers covering a wider range of POS.
6. Can be used internationally at cheaper rates?
A. No, they cannot be used at cheaper rates. But their cards are
accepted in more countries.
7. Based on AMEX/VISA/MasterCard?
A. Mostly on VISA and Master.
8. Offer better security features (Assuming that customers prefer a card
with better security)?
A. Yes, they are currently integrating a chip based security platform in
the card to allow for better authentication and reduce cloning.
9. In which regions do they have a larger share than our clients? What is
our presence in that region?
A. They have a better share in the urban regions. In the exurban
regions, their share is comparable or lesser than ours.
10. How is their customer service compared to ours?
A. Their customer service is better than ours. They provide 24*7 Toll
free customer care access.
B. How are their customer care reps compared to ours?
Their reps. are more informative and gentle while handling
customers
ANY COMPETITIVE ADVANTAGES THAT THE COMPETITIORS HAVE?

Do they primarily focus on Credit Cards?


Are their banks better located?
Are their banks more visible?
Do they advertise often in newspapers, magazines, online?
Are they favorable to a particular set of customers? (Could be
based on ethnicity, different income groups etc)

Do they offer Credit Cards for free to old/trusted customers


for free?
Are they allowed to operate in regions where we are not?
Do they provide Credit Cards instantly to customers? (post
application completion)
Do they provide better toll free service?
Is it easier to pay charges for their services compared to
ours?

BUSINESS MODEL
What they do?

Offer better customer care.


Offer combined services such as finance, credit cards, net banking, savings
accounts etc.
Provide better offers at POS.
Advertise aggressively.

Are better located.


Allow a grace period for payment
Are internationally more accepted
Provide better security
Offer better rate of returns on deposits
Expedite dispatch of credit cards to new customers

WHAT WE DO?

Primarily offer debit/credit services.


Charge higher interest for credit cards.
Have a relatively poor customer service infrastructure.
Have a smaller urban presence.
Poor advertising.
Have a troublesome verification procedure.

WHAT WE CAN DO

Assuming both cases of market expansion, and our customer base erosion,
we can realize a few problematic areas. They are poor customer service,
higher interest rate, lesser grace window, poor urban presence, troublesome
procedures, and standalone provision of services.

WHAT WE CAN DO

Improve our customer service by training our staff in customer etiquette


such that the customers appreciate it. We could also increase our customer
care staff in order to reduce waiting times if necessary. We could also go for a
24*7 model, with enhanced rep availability at night.
Offer discounts and offers. While this could come at the cost of profits in the
short term, in the long term it might lead to expansion of customer base. We
could tie up with many stores that have already partnered with our rivals, and
others with which theyve not.
We could also expand our international presence by partnering with banks
overseas.
We could allow for more customer friendly policies, allowing them to sign up
for the service in a trouble free way.
We could start/ revamp other services, and bundle them with Credit Cards.
We could offer credit cards to our old and trusted customers at a lesser rate.
We could also better our other services offered, such as returns on savings or
cheaper recommendation fees etc, which could allow us to increase our
customer base by virtue of bundling.
We could also try to convert some of our existing customers who dont use
our credit cards by offering them special discounts, vouchers etc. like flight
miles, fuel points etc.
We could increase our grace window from 15 to 30 days.
Upgrade preexisting security apparatus in order to allay any fears, and to
ensure maximum security.
Aggressively and smartly advertise. We could consider employing a
consultancy that provides advertising support.

CONCLUSION: