citibank ppt
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CITIBANK:Launching Credit
Card in Asia Pacific (A)
PRESENTED BY
ABHISHEK GUPTA (SMBA12040)
CHANDRA KISHORE BHARTI (SMBA12049)
MEGHNA GAHLOT (SMBA12058)
SHRADDHA KOTHARI (SMBA12069)
INTRODUCTION
US based bank founded in 1812
Banking transactions, Insurance, Credit cards, investment products
89 countries overseas
Premier to introduce
ATM – Automatic Teller Machine, 1970
Credit Card – The Everything card, 1960
Online transaction
ASIA PACIFIC & MIDDLE EAST (SEGMENTING)
Hong Kong
Taiwan
Australia
The Philippines
Guam
Singapore
India
UAE
Bahrain
Oman
Malaysia
Indonesia
Thailand
Pakistan
Korea
CORE PRODUCTS
Citi-One Account: Consolidated statement, Tele banking, Automatic checking
overdraft facility, linked saving and checking accounts to
earn interest, designated customer service officer
Mortgage power
Auto loans
Ready Credit for mid – level professional
Citigold for high net worth segment
CitiPhone banking transactions via phone
ATM
ASIA PACIFIC – BUSINESS SEGMENTS
Non-Resident Indian Business (NRI):
Relations with the Indian govt. – helps the central
bank to acquire foreign currencies
Branches in major financial centre all over world
International Personal Banking (IPB): Serve growing group of Asian offshore clients with global
financial needs with product like International University
Plan
ADVANTAGES OF CARD BUSINESS
Overcome distribution limitations by
Gaining card members
Targeting customers outside its branch
Cross-selling other self products.
Worldwide communication flow
Credit card transaction
Online transaction
Faster Transaction
BASICS OF CARD BUSINESS
Banks issue Visa or Master Card which are the franchise
which decrease the transaction process.
Follow common set of practices across the globe; like
Gold cards to be in gold color, providing travel accident
insurance, 24-hour customer care for cardholders
Visa/MasterCard – common standards for card-logo
design and operating rules.
Individual banks can decide: pricing, branding,
positioning and customer acquisition tactics.
Cardholder
Credit Card
Issuer
Merchant BankMercha
nt
Interchange Network
Makes Purchase
Submits transaction
Reimburses with less merchant service charge
Submits transaction
($100)
($98.50)
($100)
($100)
($97)
Bills for total of transactions made in month
Makes full or partial payment
($98.50)
TRANSACTION CYCLE (FLOW CHART)
($100)
ABOUT THE CASE
This case is about Citibank launching credit cards and we will discuss the following Whether to Launch the credit card or not? Segmentation, Targeting, Positioning If you chose not to introduce the card, what
would you do to achieve the $100 million earnings target by 1990? What kind of branch banking products should the bank offer?
LAUNCH APPROACH
There are three options to enter the market:
Adapting existing card portfolio of other
companies – facilitates quick entry into the market,
leveraging off an already developed infrastructure and
human resources
Greenfield market development – requires to invest in
direct marketing, consists of direct mail, take-ones, direct
sales force and bind-ins.
Combination of both
Strength Weakness Opportunity Threat
• Well established brand • Pioneered in
telephone banking in Asia
• Political Corruption• Consumer
attitudes and usage varies across countries
• Penetration in new markets• Mass market
positioning
• Fraud and defaults• Laws and
regulations• Competitors offer
discounts• Inadequate legal
infrastructure
SWOT analysis
LAUNCH OR NOT TO LAUNCH
CITIBANK SHOULD LAUNCH
High profits in long run
Still a lot of countries are developing
Market potential is high
Citibank can avoid regions where markets are saturated
CREDIT CARD LAUNCH
TARGETING
WHICH COUNTRIES TO ENTER FIRST?
Thailand – Target Market is large Asia’s most rapidly
developing nation Low literacy rate. Citibank
can use bind – ins (Lowest Customer Acquisition cost)
Less Risky Political status Less Competition
Malaysia – Growth Rate is
comparatively high compared to inflation
Stable Political Status
Thailand Malaysia
Population 55.0M 16.9M
Urban Population (%) 20% 38%
Urban Population 11.0M 6.4M
Target Population (%) 25% 35%
Target Population 13.8M 5.9M
Growth 10.8 % 8.1 %
Inflation 3.8 % 2.0 %Avg. Customer Bank Balance $5000 $23000Avg. Annual Customer Income $15000 $14000
Politics (Grades) B B
Competition Low Medium
WHICH COUNTRIES TO AVOID?
Indonesia – Poor customer payment on
installment debt High level of fraud Legal Infrastructure
inadequate Speculation on new political
leadership
Singapore – Target Market is very less Already saturated card
market
India – Very Large country Less Citibank Infrastructure Legal Infrastructure
inadequate Political Corruption
Indonesi
a Singapore India
Population 167.7.0M 2.7M 797.0M
Urban Population (%) 25% 100% 23%
Urban Population 41.9M 2.7M 183.3M
Target Population (%) 7% 20% 5%
Target Population 11.7M 0.5M 39.9M
Growth 4.8 % 11.0 % 9.7 %
Inflation 8.0 % 1.5 % 9.8 %Avg. Customer Bank Balance $9000 $13000 $3500Avg. Annual Customer Income $24000 $20000 $10000
Politics (Grades) C B C
Competition Medium High Medium
FUTURE OPPORTUNITIES
Australia – Strong Financial &
Credit Card Infrastructure
Large Market Avg. customer bank
balance is greater than $10000
Australia
Population 16.5M
Urban Population (%) 85%
Urban Population 14.0M
Target Population (%) 80%
Target Population 13.2M
Growth 4.0 %
Inflation 7.6 %Avg. Customer Bank Balance $24000Avg. Annual Customer Income $60000
Politics (Grades) A
Competition High
CREDIT CARD LAUNCH
POSITIONING
In Thailand; As Thailand is a popular tourist destination, Citibank must
focus on
Foreigners &
High – income group customers
US Dollar should be considered as a standard currency for these credit cards
Increase customers by providing them more convenient services like low interest rate loans etc.
POSITIONING
In Malaysia; People prefer credit card for their convenience and extra
credit and around 62% people live in rural areas. So Citibank must focus on:
Services more inclined towards family and travelers
Advertisements must be emphasizing only on the rural areas
As compared to American Express, Citibank must provide higher credit cards limits and lower joining & annual fees
Citibank can also provide an option of revolving credit.
POSITIONING
ATTAINING $100 MILLION TARGET (Without Launching Credit Card)
$100 MILLION TARGET
From Exhibit – 1
Net Revenue from Fund (NRFF) = $209.0 Million
Net EBT = $69.7 Million
We need to bring this EBT to $100 Million
For This
Keeping all the expenses constant
For $1Million EBT, we require NRFF = $2.99 Million
Thus, for $100 Million EBT, we require NRFF = $299 Million
We have to earn $90 Million more NRFF in order to achieve $100 million EBT target
$100 MILLION TARGET
Market Development
Improve and target mass market for Citibank products
Market Penetration
Advertise more so as to enhance clienteles
Diversification & Product Development
Internet Banking
Insurances
QUESTION &
ANSWER
THANK YOU
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