Alpen Bank Launching
Alpen Bank Launching
Alpen Bank Launching
Minnikova
1
Alpen
Bank:
Launching
the
Credit
Card
in
Romania
Case
background
The
Alpen
Bank
management
has
to
decide
whether
they
should
launch
a
new
credit
card
in
the
Romanian
market
or
not
and
what
target
audience
they
should
choose.
Alpen
bank
is
known
as
an
excellence
brand
serving
affluent
clientele.
The
bank
offers
several
services
such
as
deposit,
checking,
personal
loan
services
and
wealth
management
program
helping
in
financial
planning
and
investing
products.
On
one
hand
credit
card
business
is
related
to
the
growing
companys
strategy
but
at
the
same
time
Romanian
market
has
its
efforts:
low
per
capita
income
and
poor
infrastructure.
The
credit
card
industry
includes
four
main
parties:
networks,
merchant
acquirers,
merchants
and
card
issuers.
The
revenue
in
the
payments
is
determined
by
transaction
volume.
Also,
the
bank
can
generate
its
revenue
by
setting
annual
fees,
penalty
fees
and
interest
income.
Nevertheless,
the
potential
profit
must
be
protected
from
the
risk
of
default
throughout
economic
downturns.
According
to
the
case,
Romania
lacked
credit-
card
growth
because
consumers
use
cash
instead
of
cards.
Moreover,
Romanians
are
not
used
to
manage
the
credit,
which
made
it
hard
to
set
interest
rates
that
can
attract
customers.
Conversely,
rapid
economic
growth
and
increasing
income
have
enlarged
the
total
disposable
income.
The
bank
is
questioning
whether
there
are
enough
households
with
enough
money
and
what
are
the
banking
opportunities.
Market
environmental
analysis
Political
situation:
Romania
entries
into
European
Union
Economical
situation:
Rising
economy
stage
in
Romania
Total
disposable
income
increased
due
to
economic
growth
Social
situation:
Growing
economy
that
allows
customers
to
purchase
luxury
goods
and
products
from
the
EU
Rising
incomes
Encouraging
macro
economical
trends
Over
one-third
of
Romanian
households
are
likely
to
purchase
branded
imports
from
the
EU
Current
middle
class
can
become
affluent
customers
Technological
situation:
The
number
of
ATM
has
been
increasing
(8000
ATMs)
Increasing
number
of
merchants
using
card
machines
(150
000
points
of
sale
terminals)
Marina
Minnikova
2
Data
Analysis
Spreadsheet
1
shows
us
the
revenue
potential
that
Alpen
Bank
could
obtain
if
it
launches
a
Credit
Card
in
Romania.
In
order
to
obtain
this
data,
the
value
of
each
segment
had
to
be
determined.
We
had
to
find
the
number
of
future
cardholders
per
segment
and
weight
its
value.
The
annual
revenue
per
cardholder
is
122.78
M
euros,
this
account
to
all
customers.
However,
the
annual
revenue
per
cardholder
in
the
segments
of
Affluent
and
Most
affluent
is
163.31
M
Euros.
This
allows
us
to
understand
which
segment
would
be
most
profitable
to
target.
In
other
words,
this
analysis
helps
firms
to
determine
what
can
be
done
to
increase
revenues
significantly.
Furthermore,
Table
B
estimates
were
taken
in
order
to
calculate
the
acquisitions
costs
for
the
new
credit
card.
We
took
into
consideration
the
different
acquisition
tools
available
to
reach
more
prospects
in
the
country.
These
marketing
communication
plans
are
shown
in
Spreadsheet
2,
along
with
the
acquisition
cost
of
each.
The
calculations
are
done
for
both,
All
Consumers
and
Affluent
Customers.
It
is
extremely
important
to
understand
the
cost
of
acquiring
clienteles,
because
choosing
the
right
customer
and
making
proper
calculations
are
keys
to
achieve
revenue
maximization.
Spreadsheet
3
shows
the
break-even
analysis
for
Middle
and
Affluent
Customers.
The
break-even
analysis
allow
us
to
understand
when
revenues
equal
total
cost,
it
shows
exactly
at
what
point
losses
turn
into
profits.
The
number
of
customers
that
the
new
credit
card
in
Romania
needs
is
72,758
customers
to
break-even.
Moreover,
Alpen
Bank
is
looking
for
a
Return
on
Investment
(ROI)
of
5
Million
Euros
and
we
proceeded
to
do
the
calculations.
The
results
present
that
Alpen
Bank
needs
130,574
customers
in
order
to
achieve
the
ROI
goal.
Additionally,
Spreadsheet
4
illustrates
the
break-even
analysis
for
the
Affluent
consumers,
which
we
are
thinking
might
be
our
target
market
due
to
what
previous
data
have
shown.
The
amount
of
Affluent
Customers
Alpen
Bank
needs
in
Romania
to
break-even
would
be
53,604,
a
lot
less
than
targeting
the
Middle
Customer
segment
combined.
Now,
in
order
to
reach
a
viable
return
of
investment
of
5
M
Euros,
the
company
would
need
92,820
customers.
The
amount
of
Affluent
Customers
needed
to
achieve
ROI
and
break
even
is
a
lot
less
than
targeting
Middle
&
Affluent
Customers.
This
data
allow
us
to
acknowledge
which
segment
will
result
with
the
highest
cost
and
largest
revenue.
Positioning
According
to
the
current
strategy,
the
bank
should
promote
its
premium
banking
service
since
it
is
a
strong
brand
image
for
a
bank.
Since
the
bank
has
an
affluent
client
base
(more
than
200
000
clients)
it
can
leverage
it
to
build
on
an
excellent
reputation.
Market
environmental
analysis
defines
that
the
company
can
succeed
on
the
credit
card
market.
Nevertheless,
it
should
primarily
target
affluent
consumers
offering
them
an
exceptional
service.
At
the
same
time,
the
bank
has
a
great
opportunity
to
extend
its
services
providing
them
to
new
and
existing
clients
(Exhibit
2).
Marina
Minnikova
3
Recommendations:
Alpen
Bank
should
enter
the
Romanian
Market,
however
in
phase
one
it
should
only
target
the
Affluent
customers
segment.
Figures
show
that
this
market
segment
will
have
the
highest
revenue,
will
need
fewer
customers
to
reach
the
Return
On
Investment
goal
and
would
need
less
attention
to
customers.
This
new
credit
card
should
be
introduced
as
a
high-end
product,
destined
to
those
who
can
afford
a
high
credit
limit.
This
product
should
be
positioned
as
a
premium
credit
card.
Alpen
Bank
maintains
an
excellent
affluent
(existing)
clientele,
therefore
the
company
should
use
it
as
a
positioning
strategy,
use
it
as
a
strength.
Furthermore,
Alpen
Bank
should
target
the
Middle
Class
&
Affluent
Customers
in
a
second
phase.
This
would
be
a
further
approach
the
firm
may
pursue.
After
the
company
establishes
the
Affluent
Customer
segment,
it
should
attract
the
Middle
Class
with
low
interest
rates
and
interchange
fees.
Overall,
the
company
should
use
the
great
brand
image
it
already
has,
because
doing
otherwise
would
result
in
higher
costs.
Marina
Minnikova
4
APPENDIX
Spreadsheet 1
Spreadsheet 2
Marina
Minnikova
5
Spreadsheet 3
Marina
Minnikova
6
Spreadsheet 4
Marina
Minnikova
7
Exhibit
1
SWOT
Strengths
Affluent
Customers
Premium
banking
service
Revenues
from
several
streams
Opportunities
Increasing
per
capita
income
Rising
incomes
Branded
imports
from
the
EU
purchases
Potential
middle
class
market
85%
of
prospects
that
qualified
for
the
credit
card
can
switch
to
customers.
Exhibi2
Ansoff
Matrix
Market
Penetration
Existing
products
for
existing
companies
Weaknesses
Low
customer
base
Divergence
with
the
high-end
positioning
by
targeting
middle
class
Threats
Lowe
penetration
of
merchants
accepting
card
payments
Consumers
are
not
used
to
manage
the
credit
Competitors
Product
Development
New
product
for
existing
customers
credit
card
for
bank
affluent
existing
customers
Market
Development
Diversification
Existing
product
for
new
market
in
the
New
product
for
new
market
credit
future
current
middle
class
can
become
card
for
middle
class
customers
affluent customers