'Alpen Bank: Launching the Credit Card in Romania\r'

'Alpen Bank: Launching the Credit post-horse in Romania Written digest of slip of paper Presented to: Miss Tania Hassan Presented by: * Case Overview: Alpen swan has to make a crucial close whether or not they should transmit the honorable mention batting order business in Romania. The patois had to come up with a securities industry st come ingy that can incur at least €5 million in r to to each one one within 2 years. preceding to introduction of the faith brain in the market the Bank has to analyze whether an luck exists for the launch of the identification card. It has to further turn back how to position the card in the market, what should be the tar charter audience for the service.The bank has shortly established a premium compute by targeting the plentiful company. Core hassle: Whether to launch quotation card if it adds € 5million profit to consumer bank segment within 2 years. The Alpen Bank seems hesitant to launch the testify of refe rence card due to the existence of future(a) problems: * Low per-capita income levels. * The nation seemed inexperience with the wont of credit card. Consumer spending was immediate payment found and merchant acceptance of card payments was low. Analysis: Opportunity: Considering the economic and market conditions as explained in the side, Alpen Bank should launch a credit card.It seems that Alpen Bank has an opportunity as economic environment in Romania had changed from 2006 later on it joined European Union. The economy thither was developing; a growing trends of extravagance purchasing emerged, there was similarly an change magnitude likeliness of using card kinda of cash and lastly some other competitors had already taken similar strategies in the market. The credit and debit card market of Romania is also seen to grow at a uncorrupted pace of 35% in 2006 and close 9. 5million card were being used in the market. Apart from certain positives there argon certain pr oblems in credit card market too.People use cards generally for withdrawing cash rather than for buying products or services so there is slight taxation driven from transactions. Even merchants ar still ignorant in judge credit cards and prefer payments done cash Thus it shows that Alpen has an opportunity to cash on the credit card except it would require efforts especially in selling the card. military put: Alpen Bank has established a premium image and reputation of table service the abounding clientele. The bank should boil down on its current strength rather than smashing into a naked as a jaybird customer base.The loaded configuration represents the top 10% of community which has about 24% of wealth. They be priced little sensitive and thus positioning the card on high end would be beneficial for the bank. They atomic number 18 c areer oriented; active professionals who would like to use their cards frequently for making purchases Moreover, for countries l ike Romania, it is seen that credit cards are somewhat  oarlockier 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 card. The nitty-gritty level is also a potential market for the credit card.The middle furcate also has a coarse potential especially in monetary value of the size of market however they are more price-focused and would only welcome this new credit card if the interest place are low. They also puddle a monthly income which supports them to reserve a credit card. Based on the attitudes of customers in other emerging economies it can be express that customers in middle-income separate have a lower actual utilization rate when compared with affluent class. If Alpen Bank currently show on pixilated class it would be safer for it rather than it focuses on middle class. As today’s middle class may become affluent class of tomorro w.The decision whether to target affluent class or middle class depends on the revenue they generate solely or combined. The final objective of the analysis is to delineate the profit generated if Alpen Bank serves Affluent class solely or it serves both. For this purpose we have analyzed the financial data provided to us in the case. Target Segment| yearbook Income| %age of probable carte Holders| Potential Card Holders| Annual revenue enhancement| bring gross| Middle Class| 3,000-4500| 18. 2%| 3385200| 60. 63| 205244676| Affluent| 4500-6000| 15%| 2790000| 123. 38| 344230200| close Affluent| 6000+| 12. 9%| 2399400| 209. 5| 503274150| intact| | | 8574600| | 1052749026| Total Population put away for credit Card = 18. 6million Revenue Per Card Holder (all trio classes) = 122. 78 Revenue Per Card Holder ( Affluent+ Most Affluent)=163. 31 In the in a higher place scenario we have first aspired the value of each segment. Given in the case is that the population of Cardholder s is 18. 6 million. Through exhibit 5 we determine the percentage of potential cardholder for each segment give in the above table column 3. Through that we determine the Potential card holder. after(prenominal) that we work out the population of each segment with that of annual revenue.After summing up the total revenue we fraction one time it with the population of combine three segments to derive Revenue Per card holder, and once with the population of Affluent + Most affluent to derive at the value of Revenue per card holder of affluent and most affluent. client erudition for All customers | whole Cost| Prospect Reached| Response score| Qualification Rate| Conversion Rate| No. of node| Total Cost| Cost per client| rule Mail| 0. 50| 2500000| 3%| 60%| 85%| 38250| 1250000| 32. 68| get by unrivaled| 0. 10| 2000000| 2. 5%| 30%| 85%| 12750| 200000| 15. 69| FSIs| 0. 05| 3500000| 1. %| 30%| 85%| 13388| 175000| 13. 07| Direct Sales| 3000/rep| 60000| 25%| 60%| 85%| 7650| 3000| 3 . 92| commencement Cross-Sell| 1| 50000| 50%| 90%| 85%| 19125| 50000| 2. 61| | | | | | | 91163| 1710000| 18. 75| No. of guest= 2500000 * 0. 03 *0. 60* 0. 85 In case of Affluent Class the Number of Customer will be reduced by 50% for Direct Mail, Take One and FSIs so the cost per customer for Affluent class will be 18. 31 Profit Calculation All Customers| 50,000| | 100,000| Revenue( 122. 78)| 6,139,000| Revenue( 122. 78)| 12,278,000| Acquisition Cost(18. 75)| (937,500)| Acquisition Cost(18. 5)| (1,875,000)| Direct Cost (20)| (1,000,000)| Direct Cost (17. 5)| (875,000)| Revenue| 4,201,500| Revenue| 9528000| less(prenominal)| | Less| | unconquerable Cost| 5,000,000| Fixed Cost| 5,750,000| advertizing Expense| 2,000,000| Advertising Expense| 2,000,000| Total Profit/( Loss)| (2,798,500)| Total Profit/( Loss)| 1,778,000| Through the above advisement of profit we can see that hand outeven is occurring in between 50,000 and 100,000 customers. So now we calculate the breakeven. X in th e following formulae is presume to be additional customers. 122. 78 ( X+ 50,000) †( 5,750,000+2,000,000) †( 50,000*17. 5 + 36. 5*X) =0 X= 28,758 Break Even = 50,000+ 28,758= 78,758 At 150,000 customers we are generating revenue of greater than 5million so to identify the no. customer at which we get 5million profit we develop the following formulae 122. 78( X+100,000)- ( 650,000+2,000,000) †( 100,000*15 + 33. 75*Y) = 5,000,000 No. Of Customer =130,574 We apply the same process to the affluent class. Break Even: 163. 31( X+ 50,000) †( 5,750,000 + 2,000,000) †( 50000* 17. 5 + 35. 81* X) = 0 X= 3,604 Break Even = 53,604 Revenue Analysis: 163. 31 ( X+50,000) †( 6,500,000 + 2,000,000) †( 15*100,000 + 35. 81* X)= 5,000,000 X=42,820No. of Customer = 92,820 Recommendations: After doing the further breakeven and revenue analysis we recommend ALPEN bank to launch credit Card. The Bank is able to generate the profit as required. The bank should Position Cred it Card as a high-end premium product in the sign stages. Firstly it is easy for bank to allow the need of the existing customers. By positioning the product in the affluent class the Bank is able to reach breakeven point in less number of customers. After getting a strong bridgehead in the market the Bank should focus of targeting the middle class as they are affluent class of tomorrow.\r\n'