Alpen Bank Individual Case Study
Vidushi Mankotia
BA 627 Marketing Management
Prof. Gonzales | Fowler School of Business
November 27th, 2017
Problem Statement: Alpen, a Swiss bank, which was positioned in high earner segment, is contemplating international expansion for its credit card business in Romania market. Carle, Alpen’s country manager, was trying to pursue this plan if he could prove by analysis that within two years it will be able to generate €5 million of annual profit to the Consumer Bank segment. The Romanian consumer lacked experience in using credit cards which made it difficult for the bank to determine credit card limits and set interest rates which would attract
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They have never launched credit cards in the past because of low per capita income and poorly developed infrastructure.
Customers: Current private banking clients are wealthy and profitable. There was a striking income inequality in Romania, with top 10% of households by income had around 24% of the wealth. There was an increasing level of disposable income in Romanian consumer market. One-third of Romanian households were now interested in buying luxury goods from Europe indicating that there were rapid economic growth and rising income among the middle and upper-middle class. These potential customers were the ones who had net incomes of at least €500/month and they were the ones which were career-oriented professionals and were image conscious and would go for goods and services that would match their status. These customers were the most suitable for credit card issuers. They were more likely to be experienced with low consumer debt and were least concerned about annual fees. They were also most likely to use their cards with greater frequency and for higher-average tickets. Middle-class households who were potential credit card customers, earned over €200 monthly. They were a mix of young professionals and families that valued quality and were more interested in compromising and making price-driven decisions. But the actual card utilization by the middle-class consumer was significantly lower. Serving the middle
3. What are the consequences of Capital One’s IT strategy for expansion into different segments of the credit card industry, and into other industry’s?
One of the driving factors behind Nextcard believing that it could succeed in the credit card industry was it believed that it could cut cost that tradition ‘brick and mortar’ credit card companies could not. During the 1990’s it was believed that the people
The explosion of credit card use among college students has woven itself into the fabric of campus life ultimately impacting how students interact and begin in the financial industry. As students gain more freedom away from home they often begin to experience various social changes. One area in particular that is cause for concern is the number of students incurring credit card debt. Due to growth in credit card usage and the rise of debt, the ideas discussed in this paper represent the growing need to evaluate credit card company solicitation efforts aimed at students and how to begin negotiation to amend these practices. Through mediation, the focus will be to investigate if college students receive ample education on credit and
Deluxe: How luxury lost its luster, by Dana Thomas, brings a hard hitting, raw look at the world of luxury and the mass demand of luxury that has occurred. The book was published by the Penguin Group in 2007. Luxury is defined by Thomas as truly special, and was only available to the aristocratic world of wealth and old money in western culture. Luxury signified an experience and lifestyle that denotes royalty, fame, and fortune. However, with large companies owning the former family-owned luxury producing businesses, profits are the main goal not the production of luxury. Thomas reveals the unfortunate demise and rise of
In the early 1980’s the conservative government headed by Margaret Thatcher, began to liberalise the financial industry. This promoted more competition between firms to attract customers, and offer credit facilities to a wider range of consumers. Companies used aggressive marketing to attract customers, but the amount of different products available on the market to customers made it confusing, and many took on loans and credit cards without fully understanding the product they were buying, or the interest rates they would have to pay. This resulted in a wider range of consumers having access to buying goods on
Attitudes about spending changed drastically. At this point, more people had access to credit cards because credit card companies stopped limiting their customer base to the wealthy, and began issuing cards to people with moderate to low incomes (Garon, 2012, CNN World). This gave Americans a way to purchase goods and services immediately, even if they didn’t have the cash on hand. The seven to eight percent savings rate maintained in the United States from the 1960s to the 1980s plummeted to less than two percent, and remained so until the first decade of the 21st century (Melicher & Norton, 2014, p. 168).
Information-based strategy (IBS) allowed Capital One to achieved competitive advantages in credit card industry. And it is mainly relied on information and data gathered. The following discussed the consequences for expansion into different segments of the credit card industry.
A. Compared to similarly weighted portfolios Javier’s bond portfolio is lower, but he could get rid of a few higher expense bonds and reinvest into bonds with lower expenses. Javier’s lower overall expense level is due to his large stake in Fidelity Strategic Income with 28% of his portfolio invested. His investment in Pacific Advisors Government secs A and Federated Municipal High Yield hold high and above average expense ratios. Cutting these two out of his portfolio could further decrease his total expenses if his money is reinvested properly somewhere else. Either reinvesting into different bonds or into stocks could result in his desired outcome of lowering the total
card owner’s awareness at first; however, as most people tend not to be contend with their properties, regardless of their financial statuses, they tend to spend more money than the amount which they are
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
“The average American owns 3.5 credit cards and $15,799 in credit card debt… totaling consumer debt of $2.43 trillion in the USA alone.” (Beckner). Debt forces many people into depression and worrying lives. People struggle to discover happiness through financing goods, but struggle even more to find a way out of debt. Through consumerism, people lose their finances in department stores, car dealerships, and much more. Most of the possessions people buy with credit cards become impractical within a few months. The void they search for is never really filled. Consumerism is just a way to get the economy going, without thinking of a person’s individual finance
Students do not have the education needed to use credit cards responsibly. Nellie Mae (August 2007) states
American Express has plans to establish some more companies in other parts of the world which compares with the recommendations offered for the next three years, since it is recommended that the organization should establish other branches in different areas with an aim of attracting a large market share. The recommendation of advertising also compare with that of American Express since they have a plan to identify online services to attract many customers. American Express also considers partnership with other organizations which will
The overall sales of luxury goods in the year 2009 is expected to be more than US$150 billion and Asia contributes 10% to it. The concept of luxury is now not confined to only to Europe and US, the Asian subcontinent contributes majorly to it, with India and China as the newly emerging markets. Professor James Twitchell (2002) comments on the democratization of luxury and the changing consumer psychology These new customers for luxury are younger than clients of the old luxe used to be, they are far more numerous, they make their money far sooner, and they are far more flexible in financing and fickle in choice. They do not
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