...Date: February 13, 2013 To: Alpen Bank Subject: Alpen Bank Case To whom it may concern: This is to address whether or not the Romanian market holds any opportunity for Alpen Bank and our credit card services. Based on our analysis, Romania holds opportunity for us to launch our credit card services with potential for growth year after year because of a growing middle class that looks for a better standard of living. Romania’s acceptance in the e European Union should strengthen its economy. Compared to other central and eastern European countries, Romania has the least financial cards per household at 1.2 cards. With the growth that we are expecting, Romania will follow in the footsteps of its neighbors and double the amount of financial cards per household. Alpen Bank should position itself by targeting all customers. Alpen bank has previously only targeted affluent customers as far as its banking sector. Alpen bank card services should be available to all customers with the right credentials in order to grow with the growing middle class. We predict that by targeting all customers, we provide ourselves with a larger target market. Though targeting affluent only customers seems like a better opportunity for the first two years, we are looking long term. Targeting all customers will allow us to hit our $5 million profit target with 142, 248 customers in year one and 146,788 customers in year two. These numbers can be achieved by combining direct mail, take...
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...growing trend in purchasing luxury goods and increasing likeliness of using card. Although Romanian banks has already been marketing in the business, other competing banks are bullish the market (Exhibit 4) and it is hardly for them to take the same strategy in the near future. With the premise that top 10% of households by income have nearly 24% of the wealth (Exhibit 5), launching credit card business is profitable in the long term. Affluent are less price-sensitive to annual fees and are more likely to use cards with great frequency. Revenues generated by annual fees and interchange are sustainable, for affluent customers in emerging market are more sticker than in developed market. (Alpen bank should position its credit card as a high end premium product as its existing customers belong to the affluent class and it would be easier to establish itself in this segment. Furthermore this class represents the top 10 % of population which has about 24% of wealth. They are less price sensitive andmore conscious of their image so positioning the card on high end would be beneficial for the bank. This segment includes professionals who would like to purchase products and services through credit card considering it a status symbol. Moreover, for countries like Romania, it is seen that credit cards are somewhat stickier as compared to the developed countries. This shows that if Alpen positions its card as a high end product, it will gain a share of market which would stick to its...
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...Alpen Bank In Romania Question 1 By taking a look at table A that is provided in the case study you can see that they created a Net revenue impact table. On it, it shows that the lowest income they are looking for in a household is €3,000, and that from €3,000-4,500 is listed as middle class. If we then look further down we see Exibit 5 witch lists the Annual income in Romania and we see that 18.2% of Romania’s population would fall into this middle class range. Now if we do the same for the group table A has listed as Affluent, €4,500-6,000, we find that 15% of the population falls into this category. And finally if we add up all the households that make over €6,000 a year, listed as most affluent, we find that 12.9% of the total population goes in this category. So it looks like only 46.1% of Romania’s total population has enough income to afford a credit card at Alpen Bank. Out of the 46.1% of the total population that can qualify for a credit card 39.5% is made up of the middle class (18.2/46.1=39.5%). Table A also lists the annual revenue that would be made from card holder in each class, and it shows that an individual in the middle class would make €60.63. So 39.5% of their credit card income would be €60.63. Using the same process we can find that the Affluent, (15/46.1=32.4%), would make up 32.4% of their income and produce €123.38 per card holder. And the most affluent would compose 28% (12.9/46.1=28%) and each card holder in this bracket would produce €209.75 per...
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...AIMILIA FOTIADI Launching the Credit Card in Romania. My first write up case . 1-) Romanian Credit Card Market Until 2006 any kind of discussion about launching a credit card in Romania market seemed uninteresting and a risky distraction . That because the per – capita income level was low almost , 1.700 euro , here was not infrastructure of point – sale terminals , and there was minimal experience with consumer credit .The middle class was growing but it was very small and less than 50 % of the population was urban . After the 2006 and the country’s entry into the European Union the macroeconomic trends in Romania were encouraging. * Middle and upper – middle class had importantly increased its total disposable income . Exhibit 5. (11.9% + 18.8% +18.2% ) of population has annual income from 1.500 to 4.500 Euro. * Increase of the households percentage ( over one – third of Romanian households ) that were interesting in purchasing branded imports from EU and in the big cities like Bucharest a strong tendence toward luxury goods. * Increase rate of people that were interested in using cards instead of cash ( in 2006 a growth of 35 % over the 2005 ) and about 9.5 million cards that circulated in Romania . * The development of the infrastructure that was required for a payment system ...
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...ALPEN BANK CASE By 11/06/2014 TO: Gregory Carlyle FROM: XYZ RE: Alpen Bank: Recommendations for new Credit card Business in Romania DATE: 11/06/2014 Mr. Gregory Purpose: The purpose of this memo is to report my observations after careful analysis of economic opportunity of credit card business for Alpen Bank in Romania Recommendation: After thoughtful research, I would recommend you that starting a credit card business for affluent and most affluent will be more profitable. The break-even point, return of investment and profits after breaking even are all favorable for Affluent classes alone. Analysis: I have started with my analysis of customer acquisition. Keeping in mind the importance of publicity for a successful launch of credit cards from our bank, I went ahead using all the modes of publicity. After careful calculations (Seen in Exhibit 1 and 2) of customer acquisition, I came up with the cost per customer value. To begin with, the cost per customer for affluent population alone is less compared to all customers. Having decided to check the feasibility of starting the credit card business for both middle class and affluent or just for the affluent class, I calculated the weighted revenue of these classes. (Exhibits 3 and 4). It is clear that the revenue from affluent class alone is about 40 Euros higher. Then I proceeded in calculating the Net profit for a customer size of 50000, 100000 and 150000 individually for two cases.(Exhibits 5 and 6) After...
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...Carle, Alpen Bank's country manager of Romania, has one week to decide whether Alpen should launch a new credit card in the Romanian market. There are many factors to take into consideration and if it is decided to be launched, Carle also needs to decide how it should be positioned in the market. Situation Analysis Context: Alpen bank had balked at launching a credit card in Romania due to the low usage of credit cards. Transactions were based on cash, but after 2000, by the entry into European Union, the Romanian economy started to grow and disposable income increased dramatically. In 2006, total financial cards grew by 35% compare to prior year. Moreover, required infrastructure (ATMs, point-of-sale terminals) was developed significantly but still the market is underpenetrated. Customers: In Romania, there was a huge income inequality that the top 10% of households by income had almost 24% of the wealth. Credit cards are used mainly by affluent and middle class consumers. Affluent segment consists of career oriented professionals and they are not very price sensitive. On the other hand, there is a big middle class in Romania and it is growing economically. These people are a mix of young professionals and families and they are price sensitive. Also, this segment's card utilization is lower compared to affluent segment. Company: Alpen Bank has entered to Romania in 2000 and since then it is growing in the market and as of 2005 it had 15 branches in the country. The bank is known...
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...1) H ow should Alpen Bank position its card? Alpen bank should position its credit card as a high end premium product as itsexisting customers belong to the affluent class and it would be easier to establishitself in this segment. Furthermore this class represents the top 10 % of population which has about 24% of wealth. They are less price sensitive andmore conscious of their image so positioning the card on high end would bebeneficial for the bank. This segment includes professionals who would like topurchase products and services through credit card considering it a statussymbol.Moreover, for countries like Romania, it is seen that credit cards are somewhat stickier as compared to the developed countries. This shows that if Alpenpositions its card as a high end product, it will gain a share of market whichwould stick to its card.The middle class also has a huge potential especially in terms of the size of market however they are more price-focused and would only welcome this newcredit card if the interest rates are low. They also have a monthly income whichsupports them to have a credit card. Based on the attitudes of customers in otheremerging economies it can be said that customers in middle-income class have alower actual utilization rate when compared with affluent class. 2 ) W hat is the cost of acquisition of customer? C ustomer acquisition cost is the cost associated with convincing a consumer tobuy your product or service, including research, marketing...
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...Alpen Bank: Launching the Credit Card in Romania ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- Problem Brief ------------------------------------------------- As Alpen Bank’s country manager for Romania, Gregory Carle was contemplating a credit card launch in Romania market, which he would pursue if he could be confident that it would add 5 million euro in annual profit to the Consumer Bank Segment within two years. ------------------------------------------------- Alpen Bank had developed a reputation for excellence in serving affluent clientele. In addition to basic deposit, checking and personal loan services, customers had access to a wealth management program composed of financial planning and investment products. ------------------------------------------------- Some of the key...
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...DATE: Oct, 18th, 2013 CASE: ALPEN BANK CLASS: MBA586 GROUP C: CHIAWEN ‘TRACY’ CHANG CHIENYU ‘SHAWN’ HSIAO DANIEL GUTIERREZ NING ‘NINA’ BAI WENSHAN ‘NESSA’ XU Intro: Having 15 branches in Romania, Alpen Bank, a premium banking service provider is trying to expand its business in Romania and launch its credit card system. Considering the low per-capita income level and low acceptance of credit cards in Romania, we evaluated the profitability of this plan carefully and suggest Alpen Bank to enter the Romanian credit card market and explore the middle class in long run. PEST Analysis: Political • Capital market in Romania is more stable through annex to the European Union and implementation of directives. • The European Legislation to protect investors, safeguard market integrity by establishing harmonized requirements governing the activities of authorized intermediaries and to promote fair, transparent, efficient and integrated financial markets. • Substantial ascending evolution of Romanian capital market since 2004 helped by the government opening it for competition. • No limit of foreign participation in commercial companies (up to 100% ownership in Romania), full repatriation of capital and profit, equal treatment of foreign and domestic investors. Economic • Macroeconomic indicators (GDP, inflation rate, unemployment rate, etc.) registered in the past have not reached a stable point comparing...
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...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...
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...REVISED DECEMBER 18, 2012 V. KASTURI RANGAN SUNRU YONG Alpen Bank: Launching the Credit Card in Romania Introduction In September 2006, Gregory Carle sat pensively at his desk at Alpen Bank’s corporate headquarters in Zurich. The previous evening he and the senior management team had enjoyed themselves dining late above the picturesque Limmat Valley, but now it was time to focus his attention on the task at hand. As Alpen’s country manager for Romania, Carle was contemplating a credit card launch in the Romania market, which he would pursue if he could be confident that it would add €5 million of annual profit to the Consumer Bank segment within two years (see Exhibit 1 for a summary of the financial performance of the Consumer Bank segment of Alpen Bank in Romania). Carle had been with Alpen since 1992, when he joined the bank’s global marketing group. His appointment in 2000 to country manager for Romania coincided with the bank’s opening its first branch in the capital city of Bucharest. Since then, Carle had overseen the opening of 14 additional branches in Romania, with Alpen Bank developing a reputation for excellence in serving affluent clientele. In addition to basic deposit, checking, and personal loan services, customers had access to a wealth management program composed of financial planning and investment products. The idea of a credit card for Romanian consumers was not new. Historically, Alpen management had balked at launching a card business due to low...
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...Alpen Bank: Launching the Credit Card in Romania 1. If Alpen bank does in fact decide to launch a credit card, there are a variety of positions it could take. Given their reputation however as a higher income bank, I believe Alpen should target their current affluent customer base. By positioning their card in the higher income segment of the Romanian market, they will have the ability to charge a higher joining fee/ annual fee because the consumer will not weigh the decision as much as someone from the middle class. This means higher per-ticket spending and therefore break even more quickly as well as profit in time. Most importantly it does not change the perception of their brand as high end banking. The last result they want out of this venture is to lose their current clientele because people assume they are serving a broader market. 2. There are some factors Alpen bank must take into consideration before deciding to launch a credit card. First is the fact that Romania is largely a cash based market. People have a low understanding of credit and when to use it instead of cash. Among debit/credit card using countries in central and eastern Europe, Romania is towards the bottom with only 1.2 cards per household, most cards being debit. From this information it would seem that if launched, the card may not get used to its full potential. The target market for such a credit card would be those making 4,500 Euros a year and above, roughly 28% of the current population...
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...CRM- Case analysis Alpen bank Submitted by Team Pandavas (PGPME Group 2) Bhawna Gupta (P131011) Deepak C (P131015) Esha Pandey (P131016) Magdalene (P131021) Shashank (P131032) Overview: Alpen bank is one of the prominent banks headquartered in Zurich. The bank was known in the banking circles with serving mostly affluent clientele. Shopping with cash was a trend that was getting altered soon with the changing conditions of advancement in the European countries and most of them were becoming synonymous with high end customers going for shopping with credit and debit cards, A fact being quoted in the case that in 2006, the bank expected the credit and debit category growing by 35%. Alpen bank was looking at this lucrative proposition of expansion by trying to capture this segment by launching its credit card business in Romania. Romania being a small and low income country offered less possibilities for the growth of credit card business but as the country became the member of European Union it started becoming a lucrative market for the development of such products. The major players operating in credit card business in Romania were Romanian bank for Development having the largest number of customer base (606000 credit cards) while Raifessen bank was the second largest bank in this segment with the credit card utilization standing at 70%. As a result the Alpen Bank was looking for possibilities where they can tap a significant share of credit card business in Romania...
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...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...
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...4 ) Should Alpen Bank launch a credit card? W hy? And how does the credit card opportunity tocore business operations? C onsidering the economic and market conditions as explained in the case, Alpenshould launch a credit card. Economy is growing rapidly with increasing incomesand making upper middle and middle class a substantial part of the society.Moreover disposable income is also increasing dramatically. The country has10%households who have 24% of the wealth so they have sufficient income permonth. They are conscious about their social image and are less sensitive toprices.The middle class is also a potential market for the credit card. This class includesyoung professionals who make price driven decisions so the bank might think about lowering the interest rates for them. Todays middle class may becomeaffluent tomorrow.The credit and debit card market of Romania is also seen to grow at a good paceof 35% in 2006 and about 9.5 million cards were being used in the market.Romania has ATMs and point of sales terminals for card transactions too.On the other hand, there are some problems in the credit card market too.Firstly, majority of the cards being used by customers are debit cards whichmeans Alpen has to convince and make special efforts to make use credit cardstoo. People use cards generally for withdrawing cash rather than for buyingproducts or services so there is less revenue driven from transactions. Evenmerchants are still ignorant in accepting credit cards...
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