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					                                                                             Jennifer Smith
                                       Alpen Bank
                                     Question 2- kinda

        Alpen bank is posed with the question of whether to launch a credit card in the
Romanian market or not. They are weary because the current economy is weak and,
taking into past reasons not to such as:
        - low income levels
        - no infrastructure build to handle this business model
        - no history on how to use credit cards
        - the country had experienced a recession, with few left with disposable income
        - merchants prefer to accept payment by cash
        Alpen is open to changing their mind because current customers are more wealthy
since joining the European Union. There was shown to be a high growth rate of 35% in
the sector and the middle class is growing as well because of the changing economic
conditions. If they launch they will be required to meet $5 mill by the end of the second
year.

Question: Should Alpen launch the credit card?

Position
        At first glance I would think that Alpen bank should position its credit card as a
high end premium product as its existing customers belong to the middle and affluent
classes. It would be easier to establish itself in this segment because of the already
existing customer bas and the growing numbers in the target population. Combined These
groups are class represents the top percentage of the population and holds over 24% of
the wealth. They are less price sensitive and more conscious of their image. This
segment includes those who would like to purchase products and services through credit
card considering it a status symbol.
        There are currently four competitors. Combined their target audience accounts for
70% of credit card usage on the region. Although this is primarily debit cards t shows that
people understand how to use the cards (swipe and go) and may be more of a issue of
convincing them of the cards safety or benefits.

 Analysis
       C o n s i d e r i n g                 t h e        e c o n o m i c
 a n d       m a r k e t            c o n d i t i o n s                a s
 e x p l a i n e d               i n     t h e        c a s e ,         A l p e n
 s h o u l d           l a u n c h           a     c r e d i t           c a r d .
T h e      c r e d i t            a n d       d e b i t          c a r d
 m a r k e t           is s e e ing           g r o w          a t     a     p a c e
 o f     3 5 %          i n      2 0 0 6. The e c o n o m y                   i s
 g r o w i n g             r a p i d l y            w i t h
 i n c r e a s i n g               i n c o m e s, making the middle class an even
more substantial part of society and the affluent still being active players. The amount of
d i s p o s a b l e               i n c o m e            is
  i n c r e a s i n g        with t h e      c o u n t r y already having
    1 0 % of h o u s e h o l d s            w h o        h a v e       2 4 %
  o f   t h e      w e a l t h . Both the middle and affluent classes are
  c o n s c i o u s        a b o u t      t h e i r         s o c i a l
  i m a g e       a n d    a r e     l e s s       s e n s i t i v e
  t o p r i c e s . Many m a k e          p r i c e         d r i v e n
  d e c i s i o n s,       s o    an opportunity to introduce members to cards is
to l o w e r i n g        t h e     i n t e r e s t           r a t e s
  f o r   a limited time.

        There is profit opportunity for Alpen if they were to launch the credit cards but it
  w o u l d          r e q u i r e special attention to marketing efforts to sway
the existing perception of credit cards. Typically, the Romanian p e o p l e
  u s e        c a r d s to           f o r      w i t h d r a w i n g
  c a s h        r a t h e r           t h a n        f o r      b u y i n g
p r o d u c t s             o r      s e r v i c e s , s o               t h e r e
  i s      l e s s       r e v e n u e            d r i v e n          f r o m
  t r a n s a c t i o n s .                 Also, m e r c h a n t s still
prefer       c a s h to credit payments . Such efforts would cost in the beginning, but
would grow profitability over time. T h i s           w o u l d
  e n h a n c e            t h e i r        c u s t o m e r             b a s e
  a s       c o m p a r e d t o               c o r e        b a n k i n g.