Problem Statement
Six years after the successful implementation of Alpen Bank in Romania in the years 2000, Gregory Carle the country manager is wondering whether Alpen Bank should consider launching a credit card in the market. In order for the launch to be profitable several points have to be clarified such as who would the company target, what would be the positioning of this new card and how should it be marketed.
Situation Analysis
Context: After a period of recession, the economy in Romania is on a rising trend. The total disposable income of the population has increased and the middle- and upper- middle class is developing as their income is increasing.
Consumers: A consumer survey indicates a clear change in the Romanian’s
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• Some competitors are already offering the service to their clients, locking them in (lost customers for Alpen Bank)
• The affluent customers of Alpen Bank might be expecting the service, by not offering them the credit card, the firm would lose customers to its competitors
• The Romanian economy has been growing as well as the disposable income of the population, not taking action now would be losing an growth opportunity
2. Launch the credit card for middle class and affluent customers offering a premium and a basic service.
Pros Cons
• Very profitable on the long run as the potential customer base is very large. Plus the premium image of the bank should be attractive for middle class households looking for status.
• Macroeconomic positive trend in Romania
• Consumer behavior have changed, they are more interested in luxury goods and imported products which confirms the increase in income
• Credit cards in circulation have been growing at a 35% rate which represents a good opportunity for Alpen
• The actual middle class customer are very likely to convert themselves into affluent customers in the mid- long run, locking them in now would represent a strategic move • Alpen Bank knows from experience that the credit card utilization in middle class households is low which would also
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?
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Richard Fairbank and Nigel Morris, both diligent entrepreneurs, started laying the bricks for their eventual successful company, Capital One, in the late 1980’s. They both worked in the Virginia-based “Signet Bank”. Fairbank started noticing trends in the financial industry that he felt Signet was missing out on. These opportunities were in the credit card industry. He, as well as all of Signet Bank knew that the credit card industry was very risky, but Fairbank was ready to take a chance in this, what can be, highly profitable field.
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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
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