CASE ANALYSIS

Submitted By:Group 2-Ankit GiriAtul Kumar SinghD.N. Sai SrinuPrateek GulatiRahul BisenShiva

Alpen Bank: Launching the Credit Card in RomaniaCase BackgroundAlpen Bank is one of the successful banks in Romania. They pride themselves in catering to the affluent customers. They have a profitable business with a customer base of 2, 00,000 in a country of 7.7 million households. According to the case, nearly about 28% of the population lies under affluent and most affluent category and nearly about 18% of the population lies under middle class category. Economy: Post recession there was rapid economic growth and rising income, particularly among the emerging middle and upper middle class due to which there was increase in disposable income. Moreover people started buying imported products which indicated the probable potential market for credit card in the country. Income inequality was increasing in Romania and the top 10% of households by income had nearly 24% of the wealth. Credit Card Market: In 2006, total financial cards, including both debit and credit cards, grew by 35% and there were an estimated 9.5 million cards in circulation in Romania. There was much of infrastructure development but in spite of that the credit card market was underpenetrated relative to other central and eastern European countries. 18.6 million Adults in Romania actually wanted credit card. Identifying the problem1. Should Alpen launch the credit card in Romania 2. Who should be the target audience?3. Where should they position the product in market?4. What should be the mode of marketing the product?5. Is breakeven of 5million Euro achievable? If yes, then with how many customers?AnalysisThe case revolves around the main question that whether Alpen should enter into the credit card market or not. There are many parameters which are to be taken into account if they decide to launch the product. In 2000, the firm had rejected the idea to enter into credit card space because Romania faced the 3 year long recession period before 2000. But with time, economy grew at the faster rate and so thus the disposable income of the people. A study showed that nearly about one third of households were likely to purchase branded imports. Consumers were increasingly using the credit and debit cards instead of cash. Debit and credit cards grew at 35% over the prior year.Now, if Alpen decides to enter into the credit card space then they have to analyze that who should they target first and where should they position themselves. Whether they should target middle class or should they target the affluent class people. They can think of Affluent class as the target market as they were already serving them with the day to day operation but they cant leave potential middle class customers to the competing banks as in an emerging market, middle class has the tendency to become the affluent customer. They also have to see that what should be the mode of marketing. 1. Should they adopt direct mail method where the qualification rate is higher?2. Should they adopt Take-ones where the brochures were offered via countertops display?3. Should they adopt free standing inserts which was of least cost?4. Should they adopt direct sales method which is to be done by telemarketing?5. Or should they adopt branch cross selling which can leveraged Alpen Banks fixed cost?And last but not the least, whether they will be able to generate 5million euro of profit within 2 years or not.RecommendationThe recommendation are based on the excel modelling which is attached with the document. Yes, Alpen should enter into the credit card space. As economy were growing and so thus the credit card market. Moreover the credit card market was underpenetrated in Romania compare to other European countries, so there is a huge potential lies in credit card market. They should target Affluent and more affluent customers (calculation in excel) because most of the revenue from their current business comes from this customers only. Regarding positioning, they should optimize their current strength as it is easier to uphold the current brand image rather than building a new one. They have the affluent client base, and thus in this space they can position themselves. The mode of marketing should be Direct sales and branch cross sell (calculation in excel) as cost per customer is very low in these two marketing mode. Yes, with affluent class customer, Alpen will be able to generate 5 million euro within 2 years if they are able to have customer base nearly equivalent to 1,00,000 customers.