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PREPARED BY – KRITHIKA G BHARADWAJ VIVEK G ABHISHEK SINGH SIDDHARTH R SHETTY 12023 12060 12122 12168
the bank has over 200000 customers Most of them are from upper middle class and rich background Uncertainty is about the current market.Case Background Country Manager for Alpen Bank. potential customers. average income . Gregory Carle wants to launch credit cards in Romania The objective is to decide whether its feasible to launch the services in the country and what should be the positioning strategy Currently.
retailers.Credit card industry The credit card industry is divided into 4 sections Card issuers are typically banks. and they own the relationship with the card holders themselves Network or card associations such as Master Card or Visa and form the backbone of the payment system Merchant acquirers are the distribution and sales arm of the payments industry and are frequently affiliated with banks Merchants are the restaurants. gas stations etc .
particularly among the emerging middle and upper middle class had dramatically increased total disposable income Over one third of Romanian households were likely to purchase branded imports from the EU Statistics show that Romania has 1.2 cards per household.Romanian Credit card industry The macroeconomic trends during the first half of 2000’s are encouraging Rapid economic growth and rising incomes.5 million cards in circulation in Romania. apart from 8000 ATM’s and 150000 point of sale terminals . Growth is 35% for both debit and credit cards 9.
Potential customers Top 10% of the population by income controlled 24% of wealth The potential customers of the affluent class had incomes of €500 per month where as those of the middle class €200 per month The affluent base were the most attractive for the credit card issuers Revenue to be derived from : joining/annual fees. penalty fees for late payments. interest payments and interchange .
Delimma Should Alpen Banks launch credit cards in the Romanian Market? How quickly would the business generate profit beyond break-even? What level of customer acquisition would be required to break-even How should the new card be positioned. particularly given its current upscale customer base? How would the credit card opportunity compare to focusing on the core business of banking services for the affluent? .
Market Entry costs Five options explored Direct Mail Take ones FSI’s Direct sales Cross selling .
SWOT Analysis Strengths Loyal affluent customers A premium banking service Low customer base Increase in per capita income Weakness Opportunities People preferring luxury products High disposable income with population Lower penetration of merchants accepting card payments Threats Already established players Low awareness about card payments and more dependence on cash transactions .
Diversification .Alternatives Target existing customer base development .Product Target Middle class and Affluent customers .
Quantitative Analysis Data Analysis Excel sheet .
31 Acquisition cost (Middle and affluent customers) : €18.31 Break even (Middle and affluent customers) : 78713 customers Break even (Affluent customers only) : 53604 customers No of customers needed to reach ROI of €5 mn (Middle and affluent customers) : 130557 customers No of customers needed to reach ROI of €5 mn (Affluent customers only) : 100971 customers .78 Average revenue per cardholder (affluent) : €163.Some key figures Average revenue per cardholder (all customers) : €122.7 Acquisition cost (Affluent customers only) : €18.
Recommendations Target Affluent customers The break even can be achieved with lesser customers and also can quickly reach the target of €5 million The middle class segment can be targeted with lower interest rates later on. where although interest income could be lower. the bank should focus on volume based selling .