As per the Case ‘Alpen Bank: Launching Credit Card in Romania”, the following explains strategy on Segment, Target, and Position. This Analysis also has attached Excel sheet with numbers to support this strategy. Alpen Bank has been very successful in Romania building a profitable business for the wealthy – over 200,000 customers in a country with 7.7 million households. As per Exhibit 5 and Table A, there are 27% affluent residents (over 2 million), 18% middle class residents, and 53% others. The Market segments for this product launch would be based on Income level of Customers: Affluent customers, More Affluent customers, middle class, and others. As per an independent customers study, Romanian upper middle and affluent class customers are likely to purchase branded imports from EU rather than domestic products and are likely to spend more using credit cards over all; and the card’s (both credit and debit cards) usage has been increased dramatically over last year in 2006. This current trend looks more promising to launch Credit Card. As per Table A, Annual Revenue per each customer in different Segments, most of the revenue are coming from Affluent and Most Affluent Segments (€ 166.6 on average per customer with most credit card transactions done by this segment).
And Knowing that Alpen Bank already built credibility and Brand among Affluent customer segments, the easy Target Segment would be Affluent and Most Affluent customers, with middle-class segment as a potential market in the future. But the easiest and cost effective segment would be Affluent Customers to launch the product. Also based on the Exhibit 4, all other competitor banks have a huge customer base in the middle and lower middle class segments. Though the lower middle and middle-class segments are using credit cards for their transactions, the revenue generated from the middle or lower middle-class from Table A is not significant. So, Alpen Bank targeting Affluent and Most Affluent customers would be ideal target segment to enter without spending a lot more marketing and administrative costs.
As per Table B and other Administrative costs details, Alpen should focus on marketing using Direct Sales, Branch Cross-Sell, and Direct Mail (to selected affluent prospects) so that Alpen can reach only their current Affluent customers and other selected Affluent non-customer Residents to keep the acquisition costs low. As per the Customer based Break Even Analysis and Profit& Cost Analysis in the attached Excel sheet, Alpen bank should sign up close to 50000 customers in the first year to break even; and sign up additional 50000 customers in the second year to generate profits of at least € 5 million (targeted). With Alpen’s Bank’s current Affluent strong customer base, though signing up 100,000 customers in next two years is challenging, but it is achievable with proper execution of the strategy. The Positioning Statement for Alpen’s Credit Card Product would be as follows based on my recommendations.
To customers who make purchases using Credit Cards from Affluent and Most Affluent income segments, Our Alpen Credit Card offers a respected, premier, global, secure, and high-quality credit card service relative to BCR, Raifeissen, Bancpost, and BRD banks because Alpen bank is most respected quality bank for Affluent and Most Affluent customers. Alpen Bank credit card is the most respected, premier, secure, and high-quality credit card service provider that connects/services customers deeply, offers services globally in all EU countries, leverages advanced Technology to improve customer service constantly, offers customer reward programs for their use of credit card, and provides free fraud protection services. Over all, Alpen bank wants to see its customers happy.