Project Title: Creation of a Marketing Plan

Product: HDFC Credit Card

Under the guidance of Professor Dr. Pingali Venugopal

Team: Group - 13 S. No. 1 2 3 4 Name Ankit Arora Prashant Sharma Subhangkar Banik Sumit Kejriwal Roll No. G10009 G10038 G10052 G10054

Project Report Progress: S.No.

1. 2. 3. 4. 5. 6.

Details Situation Analysis Objectives Product Strategy Marketing Programme Strategy Financials and Contingency Plans Final Report

Submission Date July 31, 2010 Sept 05, 2010 Sept 05, 2010 Sept 05, 2010 Sept 05, 2010 Sept 05, 2010

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Contents
Project Title: Creation of a Marketing Plan.................1
Product: HDFC Credit Card.........................................................................1

Under the guidance of...............................................1 Professor Dr. Pingali Venugopal.................................1 Contents ...................................................................3 Section 1...................................................................6 Situation Analysis......................................................6
i) Introduction.............................................................................................7 ii) Defining the product and Competitor.....................................................7 iii) Analysis of category............................................................................13 1. Aggregate market factors.................................................................13 GROWTH:...............................................................................................15 Stages in Product life cycle:..................................................................15 Seasonality:...........................................................................................16 Profits:...................................................................................................16 Category Factors...................................................................................17 Threat of new entrants:.........................................................................17 Bargaining power of buyers:.................................................................17 Bargaining power of suppliers:..............................................................18 Pressures from substitutes:...................................................................18 Current rivalry in category:...................................................................18 3. Environment Factors.........................................................................18 a) Macro Environment:........................................................................19 1. Technological:...................................................................................19 2. Political:.............................................................................................19 3. Economic:..........................................................................................19 4. Social:................................................................................................19 a) Festivals and Religious occasions....................................................19 5. Legal:.................................................................................................19 b. Micro Environment:...........................................................................20 c. Internal Environment:........................................................................20 Scanning of Market Environment..........................................................21 iii) Company and Competitor Analysis......................................................22 Product Features Matrix........................................................................22 Gold Credit Card Features & Benefits.......................................................22 2. Objectives..........................................................................................24 3. Strategies..........................................................................................24 Marketing Mix........................................................................................25 Profits....................................................................................................27 3

Value Chain...........................................................................................27 For credit card industry, value chain can be described as follows: -.....27 Differential Advantage for each company in terms of...........................27 Ability to design new products..............................................................28 Ability to deliver the service..................................................................28 Ability to Market....................................................................................28 Ability to finance...................................................................................28 Ability to manage..................................................................................28 Expected future strategies....................................................................29 GAP ANALYSIS.......................................................................................29 iv) Customer Analysis...............................................................................31 1.) Segmentation ..................................................................................31 2) Consumer Behavior..........................................................................33 3) Targeting...........................................................................................34 4) Positioning.........................................................................................34 5) Assumptions in planning process........................................................36 1. Market Potential................................................................................36 2. Forecast Assumptions.......................................................................36

Section 2.................................................................37 Objectives................................................................37 Objectives:...............................................................38
Corporate Objectives ...............................................................................38 Divisional Objectives................................................................................38 Marketing objectives................................................................................38 Volumes & Profits..................................................................................38 Time frame............................................................................................38

Section 3.................................................................39 Strategy - Product....................................................39 c) Strategy - Product................................................40
Customer Targets.....................................................................................40 Competitor Targets...................................................................................40 Product/service features...........................................................................40 Core Strategy...........................................................................................40 Value proposition...................................................................................41 Product Positioning................................................................................41

Section 4.................................................................42 Strategy—Marketing Programmes...........................42 Strategy—Marketing Programmes...........................43
Integrated Marketing Communications Programmes...............................43 Pricing Strategy........................................................................................43 Channel Strategy......................................................................................44 Customer Management Strategy..............................................................45 Research...................................................................................................46 4

....................................................................Section 5..............................48 Financial Budgets...............................................................................................................................49 5 ......................................................................................................48 Contingency Plans........47 Controls.48 Marketing Metrics..................................................47 Controls...................................

Section 1 Situation Analysis 6 .

all you need to do is to report the loss and ask for replacement or termination of the previous credit card. they also reduce the risk of losing the cash. In case your credit card is lost. MasterCard. They are the most versatile form of retail lending. This segment raises deposits from customers and makes loans and provides other services with the help of specialist product groups to such customers. Common credit cards include Visa. Apart from being a luxury for some people. The treasury segment includes net interest earnings on investments portfolio of the Bank.725 branches in 779 cities and 4. public sector units. ii) Defining the product and Competitor 7 . The wholesale banking segment provides loans. the Bank operated 1. which allow the credit card holder to purchase goods or services on credit. The Bank is engaged in providing a range of banking and financial services. 2010. financial institutions and medium-scale enterprises. Need Safety need: Credit card is safer than carrying cash. Convenience need:Credit cards can be used in emergencies when we run out of cash. including commercial banking and treasury operations. As of March 31. American Express. Discover. Credit cards have now been loaded with a lot of attractive benefits to promote the plastic card culture in India. About Credit Card Credit cards are plastic cards with scan-able magnetic strips issued by a bank or business. and Diner’s club.232 automated teller machines (ATMs). wholesale banking and treasury. Credit cards not only cut the necessity of carrying cash (making our wallets lighter). The retail banking segment serves retail customers through a branch network and other delivery channels. government bodies. non-fund facilities and transaction services to corporate.i) Introduction About HDFC HDFC Bank Limited (the Bank) is an India-based banking company. credit cards come handy while travelling abroad. The Bank has three primary business segments: banking.

Technical: A credit card is a small plastic card issued to users as a system of payment. a) Magnetic Strip for Transaction: Credit card has magnetic strip encoding the account number which allows merchants to rapidly and accurately enter the account numbers into the verification terminal. It can be termed simply as the plastic money. The issuer of the card grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user.In gist it’s a card with a cash limit preset to help the customer to meet his necessary requirements whenever and wherever even if he doesn’t have any type of cash component with him. So whenever the customers are looking to add their buying power conducting cashless shopping or budgeting their expenditure. they find these cards suit their needs. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services. This eliminated 8 . Usage of the term "credit card" to imply a credit card account is a metonym. The next step is to enter the amount through the key pad and to send the entire transaction electronically to the processor.

After reporting the loss.99% to 3% per month. e) Interest Charges: This is the biggest source of revenue for the issuing banks. 80 spent aboard for 1 point. limits may vary depending upon the credit worthiness of the individual.5% on international ones. customer carries zero liability on any fraudulent transaction on credit card. HDFC for e. a general decline in these charges can be observed.5% on domestic airfares and 6. h) Lost Card Liability: If one is traveling and has lost his credit card. Over the past few years. This is equivalent to around 24% . Here a card holder earns a certain number of points by spending a particular sum of money from their credit cards. with increase in competition. In the Indian scenario. Even within a particular type of card. The latest in line of value added features are reward programs. a customer can end paying up heavily for the credit taken. b) Cash withdrawal from ATMs 9 . which is offered to the consumer for repaying the credit. offers discounts of 3. The interest rate generally ranges from 1. This depends on the gross income of the individual and the period for which he/she is using the card.g. 125 spent in India or Rs. Functional: a) Value Added Benefits: These include air line ticket booking and insurance benefits on lost luggage and accidental deaths.35% per year. the first warning is given at the end of three months. f) Annual Charge: This is the fixed amount. Therefore. HDFC for e. g) Grace Period: This is the extra period. b) PIN Number for security c) CVV Number for Internet transactions d) Credit Limit: All banks have different limits set for customer depending upon the type of card in their possession. if ticket are charged to their cards.g. HDFC can be reached from any corner of world for reporting the loss. then reporting the loss will not be much of problem. The interest chargers are also applicable on accrued interests.cumbersome paper handling and rapidly improved the system ability to handle the increased transactions and reduce costs. which has to be paid every year irrespective of the extent of usage. and a black mark is put against the customer in case of non-payment more than 7 months further grace period is decided on a case to case basis. uses a conversion of Rs.

retail Debit Card 4. Shopping – online. Grace Period 8. Cash withdrawal from ATM Loans ATM Card 3. Payment of bills Gift Card 5. 2. of different 4. debit cards. Defining Product Parameters HDFC Credit Card Competition 1. Value added Benefits Corporate Card Internet Banking Credit given by shop owners Technical Functional 10 . 2. Convenience: .g. Annual Charges 6. retail d) Payment of bills e) Travel Tickets Booking Emotional: 1. Credit Limit banks working in India. Pleasure: . 3. Lost Card Liability All other forms of financial 1. transactions charge cards etc. 5. Magnetic Strip containing customer IDs 2. dinner bills. and ticket bookings. Esteem: .Customer can purchase and do shopping without carrying cash on selected outlets.c) Shopping – online. CVV Number for internet All Credit Cards.High end Credit card provides a Social Envy status.Credit card provides pleasure to avoid giving cash while paying bills of shopping. Interest Charges 7. Taking credit instruments for e. PIN Number for security 3.

HDFC ICICI.Emotional 1. 3. HSBC. 2. HDFC Platinum. SBI and others Titanium Define the competitor: Following are major competitors of HDFC in credit card industry in India: Public sector banks: SBI Bank of Baroda Canara Bank Punjab National Bank Private sector banks: Kotak Mahindra ICICI Bank Axis Bank Yes Bank Foreign banks: American Express Citibank HSBC Amex Barclays Bank Standard Chartered Deutsche Bank ABN Amro Local Money Lender Shopkeepers giving credit Competitors in terms of Product Gift plus cards Money Plus cards Cash Credits cards only for the Business Man Gold Loans 11 . Shopkeepers giving credit to customers 2. Family member lender 4. Gift Card Brand HDFC Gold. 4. Local Money lenders 3. Esteem Enjoy Satisfaction Convenience 1.

03 cr transactions thus making every transaction worthy of Rs 2.262.95 involving 4. This was also the Quarter of Festival Season Shopping Season for consumers :-) Additional data reveals that .34 cr transactions thus the Average ticket size of each Debit Card Transaction being Rs 1. we compiled data directly from the RBI to track Debit Card Vs Credit Card spending habit by consumers in India. The following chart illustrates the comparison between Debit Card Spend Vs Credit Card Spend in India MoM for the Dec-2009 quarter.Vs Credit Card Transactions in India Just for the sake of comparison.423.423. Debit Card . For the quarter ending DEC-2009. Indians spent Rs 16.262. Though the Number of Credit Cards in circulation has gone down.66cr on Credit Card Plastic was done by 6. The spend on Debit Card was Rs 7. the spending has increased 12 .66 cr on Credit Card and Rs 7.95 cr on their debit cards.Mortgaged Loans Loan against securities.the spend of Rs 16.673.723.

HDFC Bank leads the path way ahead of the competitor banks. 120 million cable connection and 600 million bank account holders. a) Size of the market: Credit card in India made their debut in the year 1981 and has witnessed an unprecedented boom in the recent years. iii) Analysis of category 1. the size of credit card portfolio of the banking sector is around 2000 crores which is minuscule portion of the banking sector’s hour Rs. credit cards come under the category of Asset section. This means. The number of credit cards has been increasing steadily from 1. 13 . This would mean a compound annual growth of 25-30% in number of credit cards. a credit card holder spends between Rs. Aggregate market factors In banking terms. 2000 to 2500 on a card in one month. Also. This is against the 100 million mobile telephone subscriber. 20 lac crore outstanding loan book.5 million credit cards in 1995 to 5 million credit cards in 1999 to 12 million in 2004 and is expected to reach 35 million in 2011. on an average.which implies that Banks have been able to retain just the quality customer with long standing banking relationship. The below chart describe you the scenario in details. HDFC Bank captures nearly 36% of the credit card market share.

45 cr [ USD 5. The Average Debit Card Transaction was worthy of Rs 1553. we wanted to know the size ticket of each of the transactions.78 Bn marginally up from USD 18. only 14% Indians own a credit card.Apr-2009 to March-2010.52 in FY2008-09. Most of the transaction was reported on VISA and MASTERCARD.64 Bn in FY 2008-09.1 Bn in FY 2008-09 to USD 5.Other Banks 10.81 Bn] using their Debit Cards. 14 .23 cr [USD 13.172.26 up from Rs 1453.872. 72% of Indians use their credit cards 1-2 times (or less) during a month.The Average Credit Card Transaction was worthy of Rs 2676. According to the consumer lifestyle survey. Indian still transact a lot in Cash due to the failure on the part of successive Governments to encourage an ecosystem for e-money and curb black money.52 in FY 2008-09. 23% of Indians use their cards between 3-5 times and the remaining 5% use credit cards 6-10 times in a month.81 Bn in FY2009-10.00% HDFC BANK ICICI Bank SBI Bank HSBC Bank Other Banks During the Last Financial Year .00% HDFC BANK 36% SBI Bank 15.00% HSBC Bank 12. The Total Plastics Card Market in India during the last Financial Year was USD 19. Additionally.54 up from Rs 2517. In India.97] on Credit Cards and Rs 26. Data from RBI suggests us that . Debit Card Purchases saw big leap from USD 4. This is in sharp contrast to countries like UAE and Kuwait where 63% and 50% of respondents respectively own a credit card. Indians spent a total of Rs 62.00% ICICI Bank 27. which is running as a parallel economy with support from vested interests within the Government.

in the last few years.00% 14.00% 12.00% 8. In the last two years.00% 34.00% 9. Traveling.In terms of the average monthly spending on credit cards.00% 26. Airline tickets. 73% of Indians spend less than US$35.00% 2009 36.00% 6. GROWTH: RNCOS. 15 .00% 12.00% 12. with the growing consumer spending.00% 2006 26.00% 13. both domestic and international.00% 11.00% 2008 23.00% 14.00% 14.00% Stages in Product life cycle: Product life cycle continues for a period of customer life span but renewable upon every 3 – 5 years depending upon individual companies credit policies.00% 16. making it the largest category in traveling for credit card purchases. the Indian credit cards market is expected to grow at CAGR of nearly 28% by 2012-2013.00% 13.00% 14. says in its new report.00% 2.00% 16.00% 14.00% 12. dining and jewelry are the top three purchases that Indians make through credit cards.00% 12. HDFC BANK ICICI Ba nk SBI Ba nk HSBC Ba nk CITI Ba nk Othe r Ba nks 2005 18. while 25% spend between US$35 – 300.00% 11. As per the report. “Global Credit Card Industry Emerging Markets”. Fuel accounts for a very small portion of credit card purchases as these are largely paid through debit cards. a leading market research firm.00% 2007 33.00% 8. spending pattern has changed drastically in India.00% 19. the number of customers paying their electricity and water bills through credit cards has risen though the overall customer base is still small. changing spending pattern and surging trend of online shopping.00% 14.00% 7.00% 11. Only 2% of Indians spend over US$300 on their credit cards every month.00% 2010 38. Now people more frequently use plastic money (like credit and debit cards) for paying their day-today expenses. are now bought through credit cards.00% 15.00% 18.00% 11. Utility payment is another segment where more payments are being made through plastic money since the last two years.

has posted profits in this segment. 16 .($) Sales Profits Time Decline Product Development Stage Introduction Growth Maturity Losses/ Investments ($) Sales and Profits Over the Product’s Life From Inception to Demise Seasonality: This product is not at all seasonal because the product is sold throughout the year. The card industry is growing at 40 per cent a year. the bank’s card portfolio grew at over 100 per cent. The credit card business is highly capital intensive with banks having to invest around Rs 200 crore upfront to get the business running. Last year. smaller and many public banks prefer to issue co-branded cards or not enter the market at all. Profits: HDFC Bank. This is as simple as WHO DONT WANT EXTRA MONEY IN HIS POCKET. Spend per card for the bank is higher than the industry average of around Rs 1. The credit card base of the late entrant new generation private bank stood around 8 lakh and the debit card base at around 22 lakh in the first half of the current fiscal. Hence. which rolled out its credit card business in the beginning of 2002.500 a month and the delinquency rate is less than the industry average of 7 per cent.

2. 9. 6. Store loyalty 3. 8. Annual membership fees Joining fees Interest rate Grace period Credit limit Cash back and reward points Cash withdrawal Convenience of payments Ease of getting credit card End consumer power: 1. 7. 5. HDFC Bank Image Government Policies RBI Policies Economies of Scale Access to distribution channel Moderate Bargaining power of buyers: 1.tegory Factors Porter’s five force analysis: - Threat of new entrants: Entry Barrier: 1. 5. 4. Buyer knowledge 3. Price sensitivity Power of channels of distribution 1. 4. 2. Dependence on existing channels 2. 3. Agents 17 . 3. Brand switching 2.

Advertising expenses by existing Company HIGH 3. 4. Perceived value of substitute 3. 5.15 Demand for product category – Gold Category Degree of product differentiation – GOLD +.HIGH Bargaining power of suppliers: 1. Environment Factors 18 . Card Designer Technology Provider Database maintenance Supplying plastic Printing company VISA/MasterCard Moderate Pressures from substitutes: 1. 6. 2. Buyer can identify same product satisfying same need 2. 3. Ease of changing – free HIGH Current rivalry in category: The competition in credit card industry Number of competitors: .

Legal: a) b) c) d) e) Regulators rule and regulations RBI guidelines Boards of Banks and FIs to closely monitor submission of data to CIBIL. Political: Tax and Government policies towards Credit Card Industry. 2. to avoid the legal litigation in future.High inflation would affect consumers and they would spend less through credit cards. 3. Government legislations may shift Credit Card Industry to unprofitable level of risk. affects bank policies and schemes for credit card issues. 19 . c) Recession: .a) Macro Environment: 1.Some regions of India are politically unstable so banks would not issue credit cards in that regions. Social: a) Festivals and Religious occasions b) Credit Card Company Image in Society c) Drift towards Western Life Style 5. This would remove the need of carrying credit card with you. b) Inflation: .High Per Capita income would be an opportunity for industry. Consent to be obtained for all old and new loans. Penalties could be imposed on banks for non-submission of data to CIBIL. Technological: New Technologies are aggressing towards Contact less Payment with mobile handsets working as credit card. Region Instability: . Economic: a) Per Captia Income: . Credit Card Defaulters would increase. d) Consumer Spending Capacity 4. Consumer spending would be less.During Recession.

HDFC Bank has progressive budget for its credit cards business segment. Suppliers: a) Technology Service Provider b) Card Designer c) Master Card and Visa 2. Financial Position HDFC has STRONG financial position.f) Banks are warned against non disclosure of borrower accounts. Budget Good: . 3. Competitors: a) New Players coming into market b) Another financial products of banks c) Other Credit Card Provider c. 2010. b.HDFC bank is providing cards with good aesthetic look. 2. Buyers: a) Credit Card holders of another bank 3. Design Good: . It has profit of 2948 crore for the year ended March 31. Micro Environment: 1. 20 . Internal Environment: 1.

Make product strong with suitable S advertisement and brand endorsement Generic Marketing needs to be done. W W W S S S W S S S Functioning Knowledge of using T / use related Credit Card Data Quality Rural Market Shopping Dining Traveling T T O O O Utility Not Acceptability of T credit cards at small shops Safety O Convenience O Payment to Merchants Grace Period Emergency Withdrawal O O Cash O O O Company has good financial capability to S increase grace period. Credit card for frequent travelers. data storage) that can be used at for other purpose. HDFC can increase cash withdrawal limit S based on good transaction records Market to Corporate. 21 Demand Working Professional Tourism/Dinning Collaboration another banks Age Group with O T . W Different type of cards to various tourism W industries and hotels. Collaboration with other banks and other S financial institutions. Do collaborations with local shop vendors Trusted Brand Easy to use. Target different age groups’ needs and offer W credit cards.Scanning of Market Environment Parameter Product related Variable O/T How to address Tie up with Technology service providers S/ W W Latest Technology T services Smart Cards T Credit Card Debit Card cum O Issues credit card with customer information W (identification and customers. Do transaction settlements fast. Credit card for people who are eating outside. No Control – HDFC is dependent on agencies Educate rural customers Credit Card with shopping schemes.

150 for spends up to Rs.000 22 .Style Acceptance Acceptance Working Professionals Acceptance Celebrities T by O by O Associate HDFC Credit Card Brand with W Style. For incremental spends above Rs. 10.000 per statement cycle. 10.e. Rewards points redemption After earning all the reward points on HDFC Bank Gold Credit Card. Worldwide acceptance Accepted at over 23 million Merchant Establishments around the world.000 in a statement cycle. Customers could even convert them to airline miles with India's leading airlines through the My rewards programme. 1. 150.5 Reward Points per Rs. S Brand endorsed by role models Increase Visibility of product in market Educate customers and use for advertisements W W W Visibility O Acceptance by Low T and middle income Group High Social T Acceptance Marketing mix related Distribution Channel : O -Direct Selling Agents (DSA) Educate customers and use for use for W advertisements Wide network of DSAs W iii) Company and Competitor Analysis Product Features Matrix Gold Credit Card Features & Benefits Attractive Reward Points With effect from 1st July 2010 HDFC provides 1 Reward Point for every Rs. customers can redeem them for exciting gifts and services. 50% more Reward Points would be given to customers i. HDFC launched Corporate Card. including 110.

he carries zero liability on any fraudulent transactions on his card.95% per month Intro Rate: 0. children or parents.0% annually).200) of customer’s total bill amount or any higher amount whichever is convenient and carry forward the balance to a better financial month. Zero liability on lost card If the customer loses the card. which is 5% (subject to a minimum amount of Rs. Free Add-on card One can share these wonderful features with one’s loved ones too . HDFC Silver Credit HDFC Gold Credit HDFC Titanium Card Card Credit Card Isuuer Card Class Card Type Rewards Card Type Offered Interest Rate HDFC Bank Standard Classic HDFC Bank Gold Premium Lifestyle HDFC Bank Platinum/Titanium Premium Lifestyle MasterCard 2. Interest free credit facility HDFC gives up to 50 days of interest free period from the date of purchase (subject to the submission of the charge by the Merchant). HDFC offers add-on cards to customers FREE OF COST.HDFC offers the facility of an add-on card for customer’s spouse. After reporting the loss. For this facility customer pays a nominal charge of just 3.00% Intro Period: 1 months MasterCard Visa 2. he can report it immediately to HDFC 24-hour call centre. Revolving credit facility Pay a minimum amount.65% per month Intro Rate: 0.95% per month 2.Merchant Establishments in India.00% Intro Period: 1 months 23 .25% per month (39.

Objectives Currently HDFC Credit Card has 36% market share with high margin of profits. /extended credit whichever is higher 300/-. b) Tie up with Medium scale Industries for Corporate Cards.00 0.As HDFC is offering Free for Life Credit card they are letting their annual fees go. Finance charges on 2.500 for HDFC Bank clients.5% of amount 2.00 The annual fee is Rs 3.00 Rs 700.5% (Minimum Rs.00% per month Intro Rate: 0. HDFC wants to look for new segments for credit cards by which it can increase market share about 50% in next 5 years. 24 .00 Rs 2000. whichever is higher A transaction fee of 2.000 and Rs 2.00% per month Min. 300) would be levied on the amount withdrawn and would be billed to the Cardmember in the next statement. c) EMI offered on purchases to be given on all credit cards. HDFC wants to maintain or increase its profitability for credit card business.5% on amount cash advances withdrawn or Rs 300 withdrawn or Rs. Cash Advance Limit 30% of credit limit Cash Advance Transaction Fee 40% of credit limit 2.00% Intro Period: 3 months Joining Fee Annual Fee Rs 300.00 Rs 500.00% per month Min. As many competitors are entering into market and profit margin is decreasing.5% on amount withdrawn or Rs. 300/-. whichever is higher 2. This loss is being made up with elimination of insurance covers and adding cash back facility to the credit cards as this feature which has hire visibility as value addition and less dissatisfaction of customers due to process of filing and settling insurance claims.00 0.: Rs 100. Strategies a) Removal of Insurance coverage: .: Rs 100.Balance Rate Transfer 0. 3.

geographical location etc. HDFC and other competitors are aiming for middle to high income groups. Age Above 18 years Annual Income Greater than 120000 Geographical Location Metro. Gold Card Silver Card Platinum Card Titanium Card Co branded Cards PRICE: The price must be high enough to cover costs and make a profit but low enough to attract customers. income. Marketing Mix PRODUCT: The business has to produce a product that people want to buy. HDFC is offering credit card with: a) No Joining Fees b) No Annual Fees c) Incentives to retailers and agents PLACE: 25 .d) Catalog based reward programs. They have to decide which ‘market segment’ they are aiming at – age. e) Women specific Credit Cards. There are a number of possible pricing strategies. semi urban locations. Varieties of credit cards are offered to customers: a) b) c) d) e) 2.

5. Flow is as: a) b) c) d) e) 7. publicity. development.725 branches and over 4. The 2 important decision making areas are: • Making available the promised services to the ultimate users • Selecting a suitable place for bank branches HDFC Bank has 1. sales promotion. Standardization Customization Number of Steps Simplicity Customer Involvement PHYSICAL EVIDENCE: The physical evidences include the logo. personal selling and telemarketing. 6. the reports. 26 . There has to be adherence to certain rules and principles in the banking operations. 4. punch lines. employee’s dress code etc.232 ATMs. PROCESS: All the major activities of banks follow RBI guidelines. HDFC aims at providing and enabling favorable environment to foster growth and learning for their employees. .the furniture. HDFC also has 24x7 customer care support throughout the country. in 779 cities in India. Internal marketing paves way for external marketing of services. HDFC understands the needs of customers and therefore it is leveraging technology to service customers quickly and conveniently.Banks need to take into consideration the place factor as it decides the volume of business for them. PROMOTION: Promotion mix includes advertising.the attraction. the layout of the branch. motivation and retention of qualified employee-customers through need meeting jobproducts. other tangibles. and all branches of the bank are linked on an online real-time basis. PEOPLE: HDFC is conscious in its potential in internal marketing .

value chain can be described as follows: Primary Activities: a) b) c) d) e) Service Design Knowledge Management Delivery Systems Management Moment of Truth Management Service Competition Management Support Activities: a) b) c) d) People Process Information Physical aspects Punctuality and Reliability Differential Advantage for each company in terms of 27 . 2948 crore for the year ended March 31. Value Chain For credit card industry.Profits HDFC has STRONG financial position. It has profit of Rs. 2010.

Ability Players to Ability to Ability to Ability to Ability to desi deli Mar fina man gn ver ket nce age new the pro serv duct ice s HDFC Citibank ICICI Standard Chartered SBI HSBC Moderate High High Moderate Low Moderate High Very High Moderate Moderate Low High Moderate High Very High Moderate Moderate Low High Moderate High High High High Moderate Moderate Low Moderate Low High 28 .

Expected future strategies GAP ANALYSIS 29 .

Develop internal capability for data collection. Incentive schemes to small shop owners depending on sales. Increase collaboration with small shopping vendors. Search for new ways to provide convenience to customers. Collaborate with travel agencies as Cox and Kings. Leverage its brand image as trusted brand. Can utilize its financial strength to reduce withdrawal charges or introduce grace period for cash withdrawal from ATMs. Country Vacations. Increase rural branches and educate the rural people. 30 To collaborate with other banks and other financial institutions. Decrease period. Additional benefits to corporate customers. transactions settlement Rural Market T W Shopping O S Dining O S Traveling O S Not Acceptability T of credit cards at small shops Utility Safety O W S Convenience O S Payment Merchants Grace Period to O S O S Can utilize its financial strength to increase grace period for its selected customers.GAP Analysis Parameter Product related Variable Latest Technology services Smart Cards O/T T T S/ W W W S S S Functioning use related Credit Card cum O Debit Card / Knowledge of T using Credit Card Data Quality T Counter strategy Collaboration with Cell Phone Manufactures and latest technology service providers Credit cards to be provided with a chip having complete information about customers Launch a new credit card product with debit card features Educate the rural and semi urban people with different strategies. Thomas Cook. Increase collaboration with local and small food joints and chains. Mahindra Club . Introduce various type of cards for Emergency Cash O Withdrawal Demand Working O Professional Collaboration O with another banks Age Group O S S S S . Indian Railways etc.

whose income levels are significantly higher.000) will grow to 120 million households by 2009-2010. as there is a very small percentage of India’s ‘rich’ who pay income tax and their income levels are correctly reported.000) will increase to 9.000/year) groups will decrease significantly. Occupation: Currently.) Segmentation Segmentation of Credit Card Industry: a) Demographic Customer Segments: The segmentation of the card industry can be done on the basis of income and on the basis of motivation towards a common set of needs and wants. o The number of households in the Aspirants (Rs 18. Age: Currently. Metro. of users 2. It is difficult to obtain correct estimates of this group.000-22.) 2. 1. Customers are mainly between age from 25 to 55 years.000 Less than 16.000 + 45. No. main customers are salaried employees and business professionals.2 million households by 2009-2010 o The Consuming Class (annual income of Rs 45. b) Geographic Customer Segments: 1. growing faster and spurring a consumer revolution.000/year) and Destitute (less than Rs 16. A World Bank estimate places average annual household incomes (in terms of purchasing power) at US $6452.000 22.000-22. Income The segments which have been identified are as follows: (Source: NCAER) Segments Rich Consuming Class Climbers Aspirants Destitute According to NCAER reports: o The Rich (annual income over Rs 215.iv) Customer Analysis 1. The Indian market reflects considerable diversities in income levels and lifestyles.000-45.000-2. tier-1 cities 31 Income Group (Rs. But there are large segments of people.000 16. a case in point being the rise of software and IT enabled services.000 .000-215.15.15.

This is a new segment which is increasing day by day.Segments with high unrealized potential: • • Mid-Size cities in India have low credit card penetration. Party-hoppers: .Young generation is party lovers and number of occasions of parties is also increasing. In case of ‘Climbers’. This segment primarily has either the non-premium cards or cards issued by the nationalized banks. Rich farmers who live in the rural belt but also spend quite some time in the nearby towns can be tapped. The other segments have not been considered since they do not fall into the potential customer category. The residents of such cities are affluent and they are good markets for Credit cards. However. HDFC can link house wives credit cards to their husband’s bank account or with add-on card facility. In both the scenarios. • The growing number of netizens represents a segment with high-unrealized potential. level of service has very little motivation to offer. 32 . Vijaya Bank). Fee charges are not at all important for the ‘Rich’ but they assume a fair degree of importance as we move down the segments. with the introduction of ‘Kisan’ Cards (The major issuing banks are: Dena Bank. b) Segmentation according to perceived utility of credit cards: Preliminary qualitative research by NCAER has identified certain motivators differentiated on the basis of the income segments. Credit limit. convenience. The motivational factor has been derived from the credit card holder behavior and income levels. these segments are also being brought into purview of credit card users (assumption: 65% of low-income households are associated with agriculture). c) Psychological Segments: 1. charges. interest rate. level of service is not very high. Segments Rich Consuming Class Climbers Motivations: Convenience and acceptability. This low penetration is due to comparatively low acceptance of credit cards. Prestige. level of service.Housewives are a big segment. This shows differentiation as we move along the various segments. which are to be paid to the bank.Credit Card users have psychological feeling to use it for shopping purposes. Prestige. 3. State Bank of Indore. annual fees. service level. Shoppers: . charges Charges include all commissions. House wife: . 2. Punjab National Bank.

 70% were unaware of the action to pursue in case of loss of the card. A survey was conducted by credit card management consultancy (CCMC) of 10000 people who hold either a credit card or a charge card in 15 cities across India reveals the following facts:  78% were unaware of the difference between charge card and credit card  67% were unaware of the financial loss to be borne if they lost the card and that they would have to bear all expenses incurred on the card until the loss is reported. 2. According to a survey conducted by ORG MARG in association with Business Today. and the quality of service in that order. 6. this is applicable only in those cases where monthly bills are settled in full. lower income consumers may be more inclined to take the loan they are offered without question because they believe it is the only loan they will be offered. FACTOR Convenience Acceptability Quality of Service Cash Advance / Credit Limit Annual Fees Special Privileges Interest Rate IMPORTANCE 66% 58% 52% 48% 42% 35% 25% 33 . 4.  84% believe that they are entitled to 30 days of free credit or more in all situations.  70% were unaware that outstanding balances are waived on the death of the card holder.  65% were unaware of the high interest rates charged on outstanding balances. the features that are considered most important by customers in the case of credit cards in India are convenience. 5. In reality.2) Consumer Behavior To the extent that there are differences in behavior of the income groups. 3. 1.No. Other features that are considered important are also given in following table: - (Importance of features of credit cards in India) S. acceptability.  70% were unaware of the charge on outstation chouse  35% were unaware that bank charge an annual fee  Nearly 60% were unhappy with the credit limits offered on the card. 7.

Petrol Pumps IMPORTANCE 68% 56% 49% 41% 32% 29% 3) Targeting Following are the key segments areas where HDFC should target: a) b) c) d) Target affluent families in rural areas. Other occasions of credit card use are: S. Target customers moving from low income group to middle income group. Other reasons that are considered important are also given in following table: - S. 1. 1. 4. 6. etc. 6. 5. 4. 3.At the same time the important reasons for purchase of a credit card are travel & entertainment followed by cash advance. Refrigerator. but also the middle income categories and project it as a need 34 . Hotels and Restaurants. REASON Travel and Entertainment Cash Advance and Credit Limit Credit Period Emergency Services Special Privileges Status IMPORTANCE 56% 49% 38% 32% 28% 25% The various occasions where cards are used in India naturally flow from the reasons for purchase of cards. Hotels and Tickets Restaurants Clothes Store Provisions Store Consumer Durable – TV. 2. 2. REASON Travel. Still the majority of card spending was on Travel.No. Target SME segment with collaboration for corporate cards. 4) Positioning The positioning may be done so as to give an image that the cards can be acquired by people from not only the upper class. Target customers of other banks having low market share. 3. 5.No.

A positioning based on superior quality of service would create a favorable image in the mind of the consumer leading him to not only buy the card but also use also use it more often. This can be defined as prompt response in issuing the card. it should give a mass appeal to the cards while reinforcing the dependable and trusting image of the issuing bank at the same time. However. as benefits offered on cards are easy to copy. Positioning based on benefits: Such a positioning has not been recommended as differentiation among credit cards fails to provide sustainable competitive advantage. traveling. airliners. Positioning on quality of service: After convenience and acceptability of credit cards. Positioning on use: Credit cards in India are most often used while making expensive purchases. or Citibank-Shopper Stop card for discount and loyalty points on store purchases. In other words. Linking benefits to frequent use will help generate volume and will motivate consumers to use card even in circumstances they would not use it. There is a limitation on the APR (annual percentage rate) being reduced beyond a certain point. we must also test this. Example: Cobranded cards like 15% discount on airfare (on HDFC-Kingfisher co-branded card) for people who frequently travel. the most important thing for customers is quality of service. HDFC-HPCL co branded card for waiver on fuel surcharge etc. Positioning as a low cost card: This has previously been disregarded as an option as the costs involved are higher and one cannot gain by competing on price and advantages can be gained only on the basis of service and innovative product features. networking with big retailer. This in turn. The positioning should be such as to imply that the issuing bank’s credit cards are a part of the customer’s everyday life. However. Positioning on acceptability: Acceptability is the most important factor in the minds of the consumer and so positioning will help in retaining and acquiring more users. This can be the main positioning plank because it would increase the credit card usage in each of the segments and hence exclusive cards can be introduced for the purpose the customers wants to or would benefit from using the card. shall lead to more card usage as the card would be handy for the customer to use whenever he wants to. while giving weight to the above. hotels etc will certainly sustain competitive advantage if not increase it. online shopping and utility payments. 24 hour customer service and quick complaint and grievance redressal. This can be achieved through zero liability policy 35 .and a smart way to manage finances rather than being a debt trapper.

5) Assumptions in planning process 1. complete and accurate disclosure of fee. Positioning on security: Positioning as a card for transactions on the net: With the impending boom in e-commerce in India. Market Potential Latest data used in the report from 2003-2009. 2. credit card issuers could position themselves as the best and safest medium for payment purposes by projecting them as users of advanced encryption technology especially in case of online transactions using secured socket layer technology and multiple security features for online use and otherwise which should be conveyed to the users in laymen terms.on fraudulent transactions. interest rate and all other hidden charges during the application stage itself so as to build a trustworthy brand and loyalty amongst card users. For 2010. data has been approximated. ethical collections policy. 36 . Forecast Assumptions Forecast for 4 to 5 years has been assumed on constant growth phase. And it is assumed that no external factors would hamper the growth of credit card industry in India.

Section 2 Objectives 37 .

d) To provide continuous innovation for better customer services. b) Each division would be assigned the task of increasing its customer base in rural branches. 2948 crore for the year ended March 31. Marketing objectives Volumes & Profits HDFC Bank has profit of Rs. 2010. Marketing objective is to launch “HDFC Rural Credit Card” successfully in at least 500 villages in its first year of operations.725 branches in all over India. b) To tap untapped market and untouched segments to increase market share from 36% at present to 50% present in the next 3 years. Divisional Objectives a) HDFC bank has 1. Each branch under each division would be assigned its individual branch target as per capita income of people of that region. Time frame Time frame for Marketing Division of HDFC bank is 3 years.Objectives: Corporate Objectives a) To maintain the number one position by providing customer delight. c) To provide high standard of services to all credit card customers. 38 . From its first year of operation to 5 years in future HDFC bank wants to capture 20-40% rural market in India.

Product 39 .Section 3 Strategy .

Product/service features a.000 per annum. People having annual income between Rs. but penetration in this market is less right now. e.000 to Rs. Though there are schemes such as ‘Kisan credit card’ by SBI and other microfinance companies providing micro-loans such as SKS Microfinance.Product Customer Targets a. There are some banks providing credit cards to lower to medium income group.c) Strategy . c. Rural farmers who purchase seeds/ rice shellers/ farming equipments/ harvesters for their agricultural needs.00. Core Strategy 40 . 3. b. the credit limit of the customer will be increased (based on the payment made by customer) so the customer can become eligible for higher cards. there are no banks who are offering rural credit cards to farmers. If the credit repayment discipline is found satisfactory. All the employees of SMEs (Small and Medium enterprises) Competitor Targets d. c. 2. There are no credit card companies in the rural market space. The customer can make the credit card payment in installments. b. Interest rates will be charged on reducing balance.00. But the interest rate would be slightly higher compared to if he makes the entire payment in one go.

Product Positioning In a 2 dimensional perceptual map – two attributes would be “benefits v/s cost to maintain” the credit card. For Titanium and Platinum cards. c) SMB segment focused corporate credit cards with collaboration to SMB corporate houses. In case of rural credit cards cost to maintain would be very less but benefits would be also be less in comparison to premium cards. b) Income group having income less than 2 lacs per annum would get card of credit limit of 25000 with validity of 12 months. 41 .Value proposition HDFC Credit Card Value Proposition: HDFC provides value proposition to its customers through: a) On tractors purchased through HDFC credit card. cost to maintain card would be higher but benefits would be much higher. farmers are getting 2% cash back.

Section 4 Strategy—Marketing Programmes 42 .

Television channel and Radio would be an ideal medium to educate farmers in rural area. iii.Strategy—Marketing Programmes Integrated Marketing Communications Programmes e) Media Advertising: . Newspaper. It would also give a comparative study of all credit card categories of HDFC bank to its customers. pricing would be decided on the basis of perceptions of rural population but price would be enough higher than costs to cover reasonable variations in sales volume. 43 . HDFC bank has many types of credit cards as Silver. Also.HDFC Bank would use a number of direct marketing techniques as Infomercials. and Telemarketing etc. i. For Rural Credit card it would be “Psychological Pricing”. Purpose of Integrated Marketing communication would be to make customer switch from Cognitive stage to Affective Stage to Behavioral Stage. Each credit card would be priced on the basis of result HDFC bank would achieve from each credit card category. To penetrate into rural regions.Selling by phone can be a communication strategy for bank if it uses for customers who want information about HDFC credit cards.HDFC Bank would use Television. Catalogs. low income group and employees of SMB segment would be educated by mass advertisements. New credit card category as Rural Credit Card would be priced at lower price or free to join for farmers to attract them. Pricing Strategy HDFC bank would use “Value based Pricing Strategy”. Infomercials in form of short 5-10 minutes videos would be used to educate customers about HDFC credit card and how it is ahead from other credit cards. so that customer can choose a specific category which maps to his requirement. f) Direct Marketing: . Telemarketing. Pricing strategy would be designed such that it simultaneously creates a customer’s incentive to buy that product and the HDFC bank incentive to sell that product. Measurement of all promotional strategies would be essential for HDFC bank so that it can measure effect of promotion spending on sales. Radio and Magazines for advertisements of its new type of cards. Catalogs would show all features of credit card to customers. Gold. Platinum and Titanium etc. ii. consumer awareness and consumer purchase.

the problem with this strategy is that it is expensive and likely to lead to a decreasing number of customers. Tele Marketing: Because the telephone banking strategy has the telephone as it’s most important distribution channel. The disadvantages. This will also cater to older. Hence. are that it has attracted the most price-sensitive customers and that this segment is likely to shrink. Thus. This will be used in combination with the branch banking strategy. though. It is suitable for delivering services based on face-to-face interaction. and this is where their competencies lie. They like the convenience and the time saved.aut omobile. Most of them have a credit card and do not value the personal interaction in a bank branch. As manifested by the banks’ branch network. it gives access to a large segment and a large geographical coverage without large-scale investments. this has been the emergent strategy for most banks. and it targets a very large segment of bank customers. It also relies on thoroughly tested and secure technology. it relies on a more impersonal form of contact than the branch banking strategy. However. they have a modem and many of them are Internet users. 44 . non computer literate persons who value personal relationships.oil companies Branch Banking: Pure bank retail customers & non customers who visit the branch in both rural and urban sectors. this is the distribution channel structure they are used to. The customers belonging to the PC segment are all computer literate. Internet Banking: This segment is growing as it is providing convenience to the busy executives. The advantages connected with this strategy are that all people with access to a telephone are potential customers and that it is less costly than the branch banking strategy.Channel Strategy Channels Branch Banking Tele marketingDirect Selling Agents Internet Banking Retailers/Di stributors(F ertilizer.

Loan officers will review existing accounts (both active and inactive) and initiate contact with customers to update demographic information and determine overall loan health. Settlement offers to accounts with 90 days of delinquency. retain customers at risk of churn and drive increased activity among loyal customers. 1:1 CRM for Collections Off-the-shelf marketplace tools to determine which accounts to target and establish which payment offers or settlement offers to make because these accounts are otherwise unlikely to pay and/or destined to roll to charge-off. job changes. Behavioural modelling. fee waivers or even one time settlements (OTS) if cardholders make statements on bankruptcy or financial hardship. 1:1 CRM for Account Maintenance Account maintenance and collection avoidance. oil companies & fertilizer companies). Rules-based campaign tools by assessing prospective cardholders’ ability. Automated communications.Others. 45 . mortgage status. medical payments. 1:1 CRM to assess the health of credit card portfolio. in order to maximize portfolio value. automobile dealers. On one front. personalized statement messages. e-mail and SMS (short message service) alerts to drive account activation. as well as less traditional data like spending patterns and payment history will be used to drive improvements in risk assessment and the ability to predict churn. (Spencer’s. plus other key information to assess the risk. demographics. credit card division needs to actively convert inactive accounts. shopper’s stop.Tie ups with various retailers & distributors for distribution of co-branded cards. To provide risk-management action—lower interest rate programs. Continuous “good customer” acquisition efforts are needed in order to maintain profitable customer accounts and begin the process of portfolio cleansing. accessing traditional data sources such as demographics and credit history. The Gray zone customers to be analyzed in more detail such as geography. On the other front. Customer Management Strategy 1:1 CRM for Cardholder Acquisition: It is critical to keep the first step of the credit life cycle in place during times of crisis. stability and willingness to pay.Phone calls. systems in place to closely monitor credit risk and address customers who are either showing signs of trouble or already at risk. notify customers approaching credit limits and remind customers with late-payment habits. metro cash and carry. Scoring of applicants to identify extremely qualified or unqualified applicants. address changes and check-writing history.

Research Behaviour based predictive modelling by external specialists to identify future risks & targeting customers on their purchase habits. 46 .

Section 5 Controls 47 .

HDFC bank would spend money to educate rural people about its rural credit card.Controls Financial Budgets HDFC bank would allocate 20% of its total marketing budget to rural credit card marketing. Marketing Metrics Cost Per Acquisition (RS) CPA Average revenue per user(RS) ARPU Customer cancellation Rate-Churn(%) Churn Life time Value per customer (RS) LTV 48 .

particularly marketing expenses. The danger in this scenario is that the first reaction to missed projections is to decrease spending. and it can't do that if it stops spending on marketing. a plan.Contingency Plans This marketing plan is just that. HDFC Bank also needs to be ready for overwhelming success. 2) Overwhelming acceptance by rural population OR Revenue exceeds projection A serious increase in revenues over projections will give HDFC Bank an opportunity to increase its marketing budget above the allocated budget. The following are some of the possible scenarios: 1) Under-Acceptability by rural population OR Revenue misses projection If HDFC Bank misses its projections it may have to re-double our marketing efforts. 49 . HDFC bank has to get its message out to the target market. Plans may not always work out and HDFC Bank should be ready to deal with the likelihood that HDFC rural credit card won’t be successful among rural population. HDFC bank should not do that.

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