Citibank: Launching the Credit Card in Asia Pacific
Launching the Credit Card in Asia Pacific Region
Citibank should launch the card product in Asia for several reasons. Firstly, Citibank can ride on the rapid economic development in the region via credit card products. Secondly, it is also an excellent way to overcome distribution limitations imposed on foreign banks in the region. Thirdly, it allows Citibank to expand its customer base from the upper income segment to include the rapidly growing middle-income households, which is consistent with its global growth strategy and mission in Asia Pacific. Fourthly, by introducing credit cards, Citibank will be able to cross-sell other product lines such as Auto Loans and Ready Credit to customers outside the branch banking business.
However, Citibank must also be aware of the diverse profile of individual markets in Asia in terms of market penetration cost, distribution capability, infrastructure, regulation and market demand. It also faces problems such as unsupportive country managers and potential conflicts in brand positioning. 2.0
Positioning the Credit Card in Asia Pacific
Since its target market is the upper and middle income segments in Asia, Citibank should emphasize on creating a sense of exclusivity while bringing great convenience to the customers. It wants to be perceived by the customers as a “prestigious card that offers great convenience.”
The competitors in the credit card market for Citibank are international players as well as local banks. To avoid fierce competition, Citibank should not adopt a head-to-head positioning. Instead, it should adopt a differentiation positioning as a product providing a quality banking experience to a relatively wider customer segment, which combines strengths of the two competitor groups. Citibank should not compete on the price to avoid downgrading of image. Instead, it should differentiate itself by offering faster transaction settlement time and wider acceptance among quality hotels, restaurants and retailers. Furthermore, unlike American Express, Citibank will offer local currency cards. Although issuing a local currency card is riskier, it better caters to consumer preferences and regulation requirements in some countries.
To maintain its prestigious image, joining fee should be high to cover acquisition cost (refer to Exhibit 1) with a low annual fee to retain customers. Customers with a stated minimum spending could request to waive the annual fee in order to delight the higher-valued customers. A proposed positioning statement could be that Citibank credit card is a card which offers a sense of exclusivity and great convenience in an innovative way to upper and middle income households in Asia. 3.0
Sequential Launch Plan in Asia Pacific
Citibank will adopt a sequential plan to launch its credit card business in Asia Pacific region. 3.1
Countries to Enter First Indonesia - With the largest population in South East Asia and relatively well-developed infrastructure, Indonesia holds big market potential. 3% of its population has an average annual income more than$ 25k, taking up 40% of the card market. It will be easier to develop a focused strategy targeting at this wealthy segment. Besides, Indonesia has no restriction in issuing credit cards, making the market relatively easier to enter. Malaysia - With a prosperous business population of nearly one million, there is attractive market potential. Citibank can enter into the market by acquiring the existing card portfolio from Malayan Borneo Finance to create a win-win situation as the latter has large market share but lacks in customer service and prestige which can be complemented by Citibank’s prestige and high service quality. Taiwan – Restrictions lifted on international cards indicates a more liberal regulatory environment. With political stability rated A, Taiwan is attractive with a large percentage of upper-class households. However,...
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