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					TEAM 4 CITIBANK…

… CREDIT CARD LAUNCH IN ASIA

SITUATION

O U T L I N E

CITIBANK’S PROFILE CITIBANK IN ASIA PACIFIC
CITIBANK IN ASIA PACIFIC 1978 -1989 OVERVIEW

CITIBANK IN ASIA PACIFIC SWOT ANALYSIS

PROBLEM RECOMMENDATION
STRATEGY & MARKETING PLAN

ALTERNATIVES
SPECIFIED ALTERNATIVE COURSES OF ACTION DECISION CRITERIA AND WEIGHTS

ANALYSIS
STEP 1 : WHICH COUNTRIES ARE FAVORABLE? STEP 2 : WHICH COURSE OF ACTION TO TAKE?
FINANCIAL ANALYSIS

IMPLEMENTATION
FINAL CONSIDERATIONS FOR FUTURE DEVELOPMENT

SITUATION PROBLEM IMPLEMENTATION

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ALTERNATIVES

ANALYSIS

CITIBANK PROFILE

Customers

-Target market in the middle class segments of the country’s population

-Upscale service

Quality

-Premium product position

-Loyal employees

Employees

-Disbelief of regional managers in the new expansion strategy -Global: the marketplace is treated as one

Brand

-Premium product with status

Growth strategy

To be the most profitable provider in Asia Pacific of an array of financial services to emerging middle-income households in this region.

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RECOMMENDATION

ALTERNATIVES

ANALYSIS

CITIBANK IN ASIA PACIFIC

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RECOMMENDATION

ALTERNATIVES

ANALYSIS

CITIBANK IN ASIA PACIFIC 1978-1989

1978:

1981:

1982:

Citibank’s Asia Pacific Consumer Bank had established its consumer business in Asia

First foreign bank to enter the local trade finance market in Taiwan

Acquired Diners Club in Thailand

1983:
Citibank enters the credit card market in Hong Kong

1986:
Begins a period of growth in Thailand and the Philippines

1989:
Talwan reintroduces the idea of a credit card launch in AsiaPacific

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ANALYSIS

PACIFIC ASIA - SWOT ANALYSIS

S = Undisputed leader of the marketplace
AUSTRALIA Customers see the credit card as an “important shopping tool” HONG KONG Strong adoption of credit cards INDIA Strong economic development in late 80’s

W
AUSTRALIA

HONG KONG Lots of competition

INDIA Weak infrastructure INDONESIA Low per capita income MALAYSIA unacceptable to revolve credit

INDONESIA Large untapped population

MALAYSIA Large successful business population

PHILIPPINES Underdeveloped, political corruption SINGAPORE Saturated market

PHILIPPINES Large population and booming economy SINGAPORE “One of the world’s largest centers of traditional trade and services” TAIWAN Wealthy and educated population THAILAND Rapidly growing nation (foreign investment)

TAIWAN Before 1989, law restricted credit card THAILAND Political corruption

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ANALYSIS

PACIFIC ASIA - SWOT ANALYSIS

O
AUSTRALIA Credit card in conjunction with their banking services HONG KONG target outside branch business INDIA credit card penetration is low INDONESIA Fast growing upper class
MALAYSIA unacceptable to revolve credit PHILIPPINES credit card penetration very low

T= undifferentiated view of 1 marketplace
AUSTRALIA Saturated Market

HONG KONG INDIA

INDONESIA

MALAYSIA Many other options ( visa / mastercard ) PHILIPPINES

SINGAPORE society prides on innovation TAIWAN most wealthy and best educated THAILAND strong economy with lots of consumer spending

SINGAPORE High-tech mecca; has attracted lot of multinational corporations TAIWAN Industry is in starting up phase AMEX & Diner’s club seen as status symbol THAILAND strong economy with lots of consumer spending

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ANALYSIS

DEFINED PROBLEM STATEMENT

1. SHOULD CITIBANK PROCEED WITH THE LAUNCH OF A NEW CREDIT CARD PRODUCT IN THE ASIA PACIFIC MARKET?

+ 2. IF A CREDIT CARD PRODUCT IS LAUNCHED, HOW WILL CITIBANK DEVELOP A STRATEGY FOR THE CARD’S POSITIONING, PRICE, AND COUNTRY SELECTION? + 3. HOW SHOULD EACH CARD LAUNCH BE TAILORED TO EACH INDIVIDUAL COUNTRY?

SITUATION PROBLEM IMPLEMENTATION

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ANALYSIS

FUTURE RECOMMENDATION

Launch Citibank credit card via sequential regional roll-out ° START IN HONG KONG ° TARGET THE MIDDLE CLASS SEGMENT ° USE HONG KONG AS A TEST MARKET - Use Hong Kong as a centrally located up to later expand to: Taiwan Australia Singapore and then emerging markets ① THE WESTERNIZED COUNTRIES - Australia, Singapore, Taiwan ② THE EMERGING MARKETS - Malaysia, Thailand, Indonesia, India, Philippines

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ANALYSIS

FUTURE RECOMMENDATION

Launch Citibank credit card via sequential regional roll-out

MARKETING PLAN: ° ° ° ° ° °

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ALTERNATIVES

ANALYSIS

ALTERNATIVE COURSES OF ACTION

① Launch Citibank credit card via sequential regional roll-out starting from the best country outcome of the analysis. ① Launch card via mass expansion across the Asia-Pacific ② Enter market by acquiring an existing card company’s portfolio ③ Initiate greenfield market development to build customer base

① Do not launch a credit card

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ANALYSIS

FORMULATION OF DECISION CRITERIA

P olitics E conomy

Corruption Economic/Political risk profile GDP/capita Average economic growth rate Market saturation Credit card penetration Cards/pp % middle class % upper middle class % upper class Cultural view Language barrier Literacy rate Required technology available? Competition? % of population @ citibank Restrictions?

15% 30%

S ociety

10%

T echnology E nvironment L egal

15% 25% 5%

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ANALYSIS

ANALYSIS OF DECISION CRITERIA 1

DECISION CRITERIA 100% Hong kong Taiwan
Australia

P 15% 3 4
4

E 30% 4 4
4

S 10% 3 2
3

T 15% 4 4
4

E 25% 4 4
2

L 5% 4 2
4

94% 90% 85% 69% 60% 49% 44% 35% 25%
4 = very favorable

Singapore Malaysia Thailand India Indonesia Philippines
1 = not favorable

3 3 3 2 2 1

3 2 2 2 1 1

3 2 2 1 1 1

3 2 1 1 1 1

2 3 2 2 2 1

3 2 1 2 1 1

2 = less favorable

3 = favorable

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ANALYSIS

ANALYSIS OF DECISION CRITERIA 2

Decision Criteria P E economic/political risk corruption

weight

Hongkong
15 30 4

Asia Pacific
3

Alternatives Acquistion 2

Greenfield
2

NO launch
0

GDP/Capital Average growth rate middleclass > $6000 uppermiddle> $12500 upperclass > $12500 currency demanded credit card penetration

4

3

2

2

0

S

#cards/person language barrier? literacy rate % population @ city bank #city bank customers #population

10

5

2

3

3

0

T

telephones/population %

15

5

3

2

2

0

television/population% infrastructure
E L

competition regulations

25 5

5 5 455 0,91

3 3 290 0,58

4 3 259 0,518

4 3 259 0,518

0 0 0 0

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ANALYSIS

FINANCIAL ANALYSIS

Costs – Given Information
Customer Acquisition Costs Direct Mail Take -Ones Direct Sales Bind-Ins Direct Costs (less than 1 million cards) $25 / card Fixed Overhead Customers 250,000 Additional 250,000 Unit Cost in $ 1.5 .25 18,000 per sales rep .15 Direct Costs (1 million cards or more) $6 to $8 / card Fixed Overhead Costs $35,000,000 $10 – 15 million / year Advertising Expense $1.6 to $2.5 million

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ANALYSIS

Revenues Sources All Countries– What the competiors are doing NowGiven Information
Revenue Source International (AMEX+Diners) Bank Median $40 $60 Monthly Varies by merchant Differs Local Bank Median $25 $32.5 1.5% to 3% Varies by merchant Differs

FINANCIAL ANALYSIS

Joining Fee Annual Fee Interest Payment Merchant Discounts Transaction Related fees

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ANALYSIS

FINANCIAL ANALYSIS

Break Even Analysis – Australia

Market Size -Target those making $6,000 a year or greater
80% X 16.5 Million People = 13.2 Million Customers

-Average number of cards = 2 -Segment with highest percentage of cards = $12,500 - $25,000 (35%)

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ANALYSIS

Costs - Australia
Channel Direct Mail Take-Ones Direct Sales Bind-Ins Channel Cost = 450,000 = 500,000 = 54,000,000 = 450,000 55,400,000 Total Percentage Qualified Respondents qualified Responses .666 4000 6000 .333 10000 30000 .666 10000 15000 .333 10000 30000 Unit Cost 1.5 X 0.25 X 18000 X 0.15 X Prospects Reached 300000 2000000 30000 3000000 Rsesponse Prospects Rate Reached X 300000 .02 X 2000000 .015 X 30000 .5 X 3000000 .01 Total Qualified
34,000

Total Respondents
=6000
=30000 =15000

=30000
Actual Customers

Direct Mail Take-Ones Direct Sales Bind-Ins

Conversion Rate 80%

27200

TV Advertising 2,500,000 Costs TV Customers 420,000 Overheard Costs 35,000,000 Total Costs 104,080,000

Total Direct Costs Customers 25 447,200

Total Direct Costs
11,180,000

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ANALYSIS

Revenue - Australia
Revenue Types Joining Fees Annual Membership Fee Interest Revenue
Merchant Discounts

$ Amount 60 30 140
5

Number of Card Holders 447,200

Revenue per Card 235

Total Revenue 105,092,000

Revenue per Card

235

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ANALYSIS

Summary - Australia
Break Even # of Credit Cards 447,200 Break Even Cost $104,080 approximately Break Even Revenue $105,092 approximately

-A high number of cards in year 1, but even if revised down, not difficult to break even -Must differentiate with good service in this market -Citibank brand image alone will not sell this card in Australia

THANK YOU FOR YOUR ATTENTION


				
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