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Citibank: Launching the Credit card in Asia pacific
Case Analysis Report
Prepared By: GROUP H Abhishek Kulshreshta Anmol Aggarwal Dinesh Tewari Kartika Garg Lalatendu Das Sudhon Kanagaraj

Citibank: Launching the Credit card in Asia pacific
1. Background
In 1988, Citibank’s Asia Pacific consumer bank (referred to as Citibank henceforth) operated in 15 countries throughout Asia Pacific and Middle-east. The bank generated net earnings of $ 69.7 million over net revenue of $209.0 million. Objective Rana Talwar, Head of Citibank’s Asia Pacific Consumer bank had set a growth objective of reaching $100 million in earnings by 1990. Strategy Citibank aimed to use credit card business to    Acquire new customers (Card members) Target new customers outside its branch business Cross-sell other Citibank products and services

2. Problem Statement
Rana Talwar is facing the following key decisions    Given the goals, should Citibank’s Asia Pacific consumer bank launch the credit card business If they go launch credit cards, which countries should they go for? In the launch scenario, what should be the positioning and pricing strategy in each countries where the launch is taking place

3. Analysis of Business case for credit cards
Citibank’s Asia Pacific Consumer bank expects to increase its earnings by $30 million over two years. Assuming the bank retains its current profitability ratio, it is expected to increase its revenue by 90.8 million over next 2 years. Given the distribution limitations imposed on foreign banks in Asia Pacific region, it is unlikely that Citibank would be able to increase the revenue by $90 million through their current consumer banking operations. Hence Citibank must launch new products to generate additional revenue stream. Looking at the low penetration of Credit cards (Exhibit 8 of the case) and high growth rates (Exhibit 4 of the case) of Asia Pacific countries, Citibank has a great opportunity to launch Credit card business to generate the additional revenue and profits.

4. S-T-P analysis of Credit card business
Citibank is already positioned as a prestigious and consumer oriented international bank. Citibank’s credit card division should be aligned to the current brand positioning. Given below is S-T-P analysis of the credit card division

Group H

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Citibank: Launching the Credit card in Asia pacific

S-T-P Segmentation    

Description Segmentation based on buying power of consumer Different slabs of Annual income can be used to segment the market Traditional customer base of Citibank e.g. upper income group Rapidly growing middle income households (annual income > $6000) {except for Malaysia, where regulations mandate credit cards can only be issued to households with annual income > $9000} Gold Cards: Premium international card as direct competitor to American Express Classic Cards: Positioned for primarily domestic use by middle income households

Targeting

Positioning

 

5. Market Analysis for launching Credit Card Business
Based on S-T-P analysis and 5-C situational analysis (Appendix A), we adopted below mentioned steps for analyzing the potential market for launching credit card services     Set our target market to be households with income greater than $6000 per annum Determine market size per country by computing number of households with annual income>$6000 Compute market saturation rate (Ratio of # of card holders / market size) Compute Virgin Market size (i.e. untapped market) { = (1-market saturation rate) * market size}

The computed market data is given in Appendix B. Growth vs. Risk Matrix Using the above data, we prepared a Growth vs. Risk matrix by plotting countries on following two axes   Political and economic risk GNP growth rate

In the Growth vs. Risk matrix, the Virgin Market size is represented by the size of the circle.

Group H

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Citibank: Launching the Credit card in Asia pacific
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