How did Cofidis evolve to be a success? Have its segmentation, targeting and positioning efforts contributed to this.
Cofidis is an offspring of leading French direct marketer 3 Suisses international. Before 1981, 3 Suisses offered its customers a payment card managed by Cetelem. That was used for 12% of catalog sales. However, unless 3 Suisses agreed to pay Cetelem FF 5 million per year, new restrictive credit regulations in France were forcing Cetelem to withdraw in 1981. 1n 1982 after two unsuccessful attempts at accruing a small bank, 3 Suisses international decided to create an independent credit company called Cofidis. Cofidis was already profitable in 1983 and in 1986, Cofidis went beyond the store credit card business and introduced Libravou. It consisted of a cash reserve that customers could use to buy what they wanted, when they wanted, without any justification. The reserve could be used in part or completely, with no charged involved when not used, similar to bank overdraft facility. Libravou had an advantage over home equity loans as it was an unsecured loan and it needed no customer asset for collateral. Pre-determined monthly payment was partly used to re-fill the reserve whenever customers used Libravou. The credit line was granted for one year, automatically renewable in the absence of any incident. The Libravou reserve came in various amounts, from FF 5000 to FF 25000. The monthly payment was chosen by the customer to be either FF 150 or FF 200 per FF 5000 slice of reserve. Applying for Libravou was meant to be simple. It could be done over the phone (between 8 am and 9pm, Monday through Saturday), by mail, or online. The questionnaire to get the load requested information on family situation (marital status, dependents, government allocations received, pensions received and given), housing (owner vs. renter, at what cost, since when), work situation, income, and current debt situation. It took only seven minutes to setup the application file over the phone. And the file was examined almost immediately and in case of acceptance a contract was mailed the same day for signature. Libravou, Confidis also offered "modulable loans" (conventional personal loans with customizable terms) that were introduced in 1997 to address those customers who were resistant to revolving credit. Specific loans were also available for home improvements or car purchase. Additionally, Confidis was managing la "Carete 4 Etoiles" ("4-star card") owned bye 3.7 million households in France, that allowed 3 Suisses catalogs customers to pay for their purchases in monthly installments, and a number of credit cards targeted at catalog buyers. Confidis Segment consumers into 4 attitude types, the relative importance of which varied greatly across countries. 1.
The enthusiast used all forms of financing without restraint, and did not mind bank overdraft and multiple debts. The enthusiast was typically younger, urban, economically well off, and belonged to a 4+ member household. 2.
The specialist mainly dealt with one form of credit, and tended not to rely on bank overdraft. Slightly older than the enthusiast, and living in a slightly larger household, the specialist otherwise resembled the enthusiast. 3.
The receptive did not user consumer credit very much, nor bank overdraft, but dint have a negative attitude toward credit products. 4.
The adverse used neither credit nor overdraft and viewed consumer credit as superfluous. Typically a female, urban as well as rural, aged more than 55, living alone or in couple, with modest resources and no children. Based on the evolution of customer credit in France in parallel with macroeconomic indicator, Cofidis analyst observed that the growth of consumer credit was negatively correlated with variations in unemployment and positively correlated with the growth of the gross interior product and household consumption. Cofidis
Cofidis targeted and positioned it self indifferent...
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