Case Analysis for Alpen Bank

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11/6/12

Case Analy sis f or Alpen Bank

Case Analysis: Alpen Bank The main issue that Alpen bank is facing is whether or not they should launch the credit card business in the Romania market and which group of target audience they should select while applying the launching strategy. Moreover, specifically to Carle, he needs to come up with a program from which, Alpen bank can generate at least €5 million in profit within 2 years. Moreover, clarified positioning strategy and customer segmentation is also needed to secure the success of the program. In the case, it seemed that Alpen had the opportunity to act since economic environment in Romania had changed from 2006 after its entering into the EU: the economy there was developing; a growing trends of luxury purchasing emerged; there was also an increasing likeliness of using card instead of cash; other competitors had already taken similar strategies in the market; Alpen’s traditional banking business had a great penetration throughout the country, etc. However, such a growth was not enough compared with other countries of the region. Besides, to launch the credit card business in Romania might be risky and do harm to the customer base. Then what should Alpen do? According to the charts 4 & 5 in the appendix, regardless the target audience, launching credit card business in Romania is profitable with the premise that if the customer base is big enough. (All the calculations in the charts were based on revenue potential and acquisition costs.) Comparing between the 2 options, it seemed that choosing affluent customers only would be easier to achieve since number of the required customers of breakeven point with a ROI of 5 million is smaller than that of choosing both middle class and affluent customers. Moreover, as customer base grew, profits of selecting affluent customers only were bigger than those of selecting both middle class and affluent customers because of the fact that there was significantly lower card utilization for middle-class customers. Thus, in order to successfully launch the credit card business into Romania, Alpen bank needs to pick its target audience which is composed of affluent customers only. However, all of these are based on the premise that Alpen can acquire enough customers within 2 years; otherwise, it will lose money. Nevertheless, there was a promising fact in the Romania market that those affluent customers were more likely to at least try Alpen’s cards. Then considering marketing strategy options, Alpen should focus more on direct sales and branch cross-selling, since their costs per customer (relatively €3.61 and €2.92) are significant lower than those of other 3 tools. Moreover, direct sales and branch cross-selling will work more efficiently since they have much higher effective hit rate than the other options regardless the target audience choices. Thus, these tools can provide a flexible space for Alpen to move on to other potential strategies in the long-term. Regarding the positioning strategy, Alpen should emphasize on its current strength since it is much easier and safer for a brand to maintain its current image rather than explore a new one. Alpen has already established the reputation for excellence in serving affluent clientele. With such reputation and brand awareness among its target audience, Alpen seems to be more likely to make profits with launching its credit card business into Romania market. APPENDIX REVENUE POTENTIAL The process of determining revenue potential from the Alpen Bank case is based on determining revenue potential per customer segment and then determining the overall value per customer. First, determine the relative value of each segment. Find the number of potential cardholders by segment and weight the value of each segment by calculating the percent of the total potential cardholders each segment represents. (e.g. the middle class is 18.2% of the total population and 39.53% of total potential...
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