Purpose: Alpen Bank is facing potential growth opportunities in terms of launching a credit card to the Romanian market. The overall goal is to increase annual profit by €5 million within two years of launch. Selection of the right target audience, while applying the appropriate launching strategy is the direction of our focus. Our goal is to extend the Alpen Bank premium service to customers via a new product market. Predictions of economic growth in Romania, proves that the market is growing increasingly ripe for credit cards. Therefore, the issue is not whether or not Alpine Bank should launch a credit card in Romania. The concern of Alpine Bank should be when to launch said services in Romania. Current models, statistics, and research are conclusive; the time to invest in Romania is now. Position Statement: The recommendation standing and supported by enclosed financial statements are as follows: Launching a credit card in the Romanian market would meet the stated purpose by targeting the affluent and most affluent audience (Exhibit 1). The marketing approach will consist of direct sales in conjunction with branch cross selling (Exhibit 2). Also the use of magazine and television advertising strategies will enhance our position. This approach will add support for the recommendation of taking advantage of a primarily non-penetrated market. Reason: The opportunity to invest in the Romanian credit card market yields potential revenue growth, along with increasing the life time value of each customer, new and existing. With Romania entering the European Union, Alpen Bank has been prompted to re-visit its previous credit card approach in the emerging economy. Additionally, there has been an increase in luxury products and purchases, displaying increased consumer purchasing power, a potential indicator of an increased interest in credit card. Furthermore, Romania is in a transition period, with cards gaining favorability over cash payments. Alpen Bank hopes to build upon prior methods explored in Romania by competing banks in penetrating the credit card market.
Decision Options (Exhibit 6):
1.Launch a credit card in Romania.
2.Do not launch a credit card in Romania.
Decision Option 1
a.Add a new market: Alpen Bank can continue its successful venture in Romania by adding a credit card to its portfolio. This will foster a continuing growth in an increasingly affluent Romanian upper class. As purchasing power is determined by income level and accumulated wealth, the affluent class is more able than the middle class to make purchases on credit. b.Increase revenue: Current models and predictions indicate a strong opportunity to significantly increase the yearly revenue by investing in the credit card market. Calculations display how the venture will increase the life time value of each customer, ensuring future growth. (Exhibit 1)
Decision Option 2
a.Focus on existing markets: Venturing into the credit card market could draw resources away from core Alpen Banking services already in effect for the Romanian market. b.Assure no potential risk: All investments come with inherent risks. By investing substantially into an exploratory market, Alpen Bank is running the risk of not meeting the expected outcome. The potential monetary risk could run into the millions of dollars, along with an incalculable risk to reputation. How to measure Decision Option 1
a.Establish a customer base with the affluent and most affluent: By building upon the currently excising clientele, along with attracting untapped segments of the prosperous Romanian upper class. By comparing the actual number of clients utilizing the Alpen Bank credit card with the models and predictions made pre-credit card launch. (Exhibit 4) b.Increasing revenue from the credit card launch: Expected revenue from the credit card enterprise is projected to be €6,698,391 within two years (Exhibit 2). By updating current calculation models with on-going...