A REPORT ON Launching the Credit Card in Asia Pacific Countries by Submitted To Mr. Kiran Kumar Pedada Marketing Strategy Submitted By K. V. Ch. Madhu Sudhana Rao (32) R. Avinash Kumar (20) Y. Santosh (11) Indian Institute of Planning Management Banjara Hills, Hyderabad. CITI BANK Introduction Citigroup Inc. is an American multinational financial services company based in New York City. Citigroup was formed from one of the world’s largest mergers in history by combining the banking giant Citicorp and financial conglomerate Travelers Group on April 7, 1998. Citigroup Inc. as the world’s largest financial services network in the world, spanning 140 countries with approximately 16,000 offices worldwide. According to Forbes, Citigroup used to be the largest company and bank in the world by total assets until the global financial crisis of 2008. Today it is ranked 24th in size compared to HSBC which now ranks as the largest company and bank by assets in the world as of 2011. The company employs approximately 260,000 staff around the world, and holds over 200 million customer accounts in more than 140 countries. It is a primary dealer in US Treasury securities. 1
In Asia Citibank started their services in India, Philippines and Hong Kong in 1902. At present they are performing their services in 11 Asian countries. Citibank’s mission in the Asia Pacific region was to be the most profitable provider of a wide array of financial services to an increasingly affluent and middle-income market, and to reach the rapidly growing middle-income households in this region. 2 Objective: Citibank believes expanding their credit card business into Asia Pacific would be a way to increase their revenue, as they are currently restricted on the number of foreign bank branches they can open.
Citibank must decide in which countries of the Asia Pacific it should invest, and which countries to target first. 3 Executive Summary We recommend in the first phase to expand the credit card business into India, the Philippines, Taiwan and Thailand. These are fairly stable untapped markets. Our strategy is to focus generally on the high status groups in these markets. The cards should be issued in the local currency but include an option for Taiwan customers to use US dollars. In the next phase enter into Malaysia, Australia and Singapore.
Again focus on the high status groups in these markets. We don’t recommend expanding into Indonesia due to the unfavorable economic conditions. Marketing should focus on direct sales and bind-ins for markets high status cards and expands these channels with direct mail and take-ones where a more diversified population is targeted. Problem Statement Citibank believes expanding their credit card business into Asia Pacific would be a way to increase their revenue, as they are currently restricted on the number of foreign bank branches they can open.
Citibank must decide in which countries of the Asia Pacific it should invest, and which countries to target first. DATA & ANALYSIS Current Performance in Asia Pacific Citibank, with operations in 15 Asia pacific and the Middle East countries, earned $69. 7 million in 1998 and was an undisputed leader in most marketplaces. The table below shows that the profit margins in Asia Pacific are a phenomenal 22% on average. Looking at the performance of individual countries in Asia Pacific (See table below).
We can see that Thailand, Indonesia, Taiwan and Singapore perform over average while Hong Kong, Philippines, Malaysia and India perform below average. Ranked by performance* | Thailand| Indonesia| Taiwan| Singapore| Hong Kong| Philippines| Malaysia| India| # Of Bank Customers(000)| 12| 21| 16| 18| 130| 46| 29 | 61| # Of Bank Accounts(000)| 16| 25| 30| 67| 250| 85| 58| 165| Net Revenue From Fund| 8| 12| 11| 16| 67| 19| 11| 6| Net Revenue/Customer| 0. 67| 0. 57| 0. 69| 0. 89| 0. 52| 0. 41| 0. 38| 0. 10| Net Revenue/Accounts| 0. 50| 0. 48| 0. 37| 0. 24| 0. 27| 0. 22| 0. 19| 0. 04| SWOT ANALYSIS
Strengths: * Undisputed leader of the marketplace * Hong Kong: people are used to credit cards- relatively affluent population * India: strong economic development in late 80’s * Malaysia: large successful business population * Singapore: “one of the world’s largest center of traditional trade and services” * Thailand: rapidly growing nation (foreign investment) Weakness: * Undisputed leader of the marketplace * Hong Kong: people are used to credit cards- relatively affluent population * India: strong economic development in late 80’s * Malaysia: large successful business population Singapore: “one of the world’s largest center of traditional trade and services” * Thailand: rapidly growing nation (foreign investment) Opportunities: * Undisputed leader of the marketplace * Hong Kong: people are used to credit cards- relatively affluent population * India: strong economic development in late 80’s * Malaysia: large successful business population * Singapore: “one of the world’s largest center of traditional trade and services” * Thailand: rapidly growing nation (foreign investment) Threats: * Malaysia: many other options to choose from in 1989 (MasterCard and
Visa) * Singapore: “high-tech mecca” has attracted many multinational corporations * Taiwan: restrictive laws prohibited thus industry is in early stages * Taiwan: AMEX and Diner’s Club worldwide respected reputation * Citibank’s undifferentiated view of one marketplace Positioning, Segmentation, Target Countries and Marketing We recommend taking different strategy for each county because the economic, political, regulatory and cultural situations are so different from country to country. Generally, Citibank should focus on the upper and middle class customers and segment these two types. By offering multiple brand names.
Some should have annual fees and different interest rates and benefits should be offered. To reduce risk and take advantage of the experience one gains by introducing a credit card into a new market, we believe Citibank should not target all the countries at the same time. The cards should be positioned as a middle product between the traditional premium cards such as AMEX and Diners and the local bankcards. Conclusion: From the analysis it is clearly understood that the company can enter into the markets in India, Taiwan and Thailand. Company strategy is to focus on the high status segments in these markets.
The only exception is Taiwan where we believe there is demand for a USD credit card, due to the large number of international travelers. Managers in Taiwan need to get the approval of NCCC to launch the credit cards. This is a crucial point that needs to be taken care of in the beginning. Managers in the Philippines need to work closely with Visa to ensure that a large number of merchants will accept credit cards. Recommendations: 1) We recommend that we enter the markets in Indian, Philippines, Taiwan and Thailand. 2) Entry should be delayed in Malaysia, Australia and Singapore. ) The company should not be enter into countries like Hong Kong, Korea and Indonesia. 4) Sales Managers should be made responsible for expansion in Indian, Philippines, Taiwan and Thailand. The following table represents various recommendations to be followed by the company in various countries: | Hong Kong| India| Indonesia | Malaysia| Philippines| Singapore| Taiwan| Thailand| Korea| Current Market Situation| Diners | Large potential market| Limited market| Mature market| Emerging market| Almost saturated| Growth market| Emerging market| Diners| Opportunities and Issues| -| Low credit card penetration. Strong economic development.
Wealth concentrated. | Poor country, rural population. | Plenty of card options. Used to revolve credit. Favorable legislation| Booming economy. Credit card penetration low. Customer acceptance to revolve credit. | Many players. Bank reputation is important. | NCCC authorization. Industry in relatively early stages of development| Booming economy. Relatively few mayor players| -| Objectives| -| First mover| -| Gain market over local banks. | Develop a new middle-class income market. | Retain present customers. Offer a complete portfolio of services to new customers| Early mover focus on middle income customers. First mover| -| Marketing Strategy| -| Target upper- -class. Offer a product better than the local banks and comparable with Diners| Target professionals and rapidly growing wealthy class. | Offer better service than local banks. Offer high credit limits. | Offer a product between Amex/Diners and local banks. | -| Target upper- -class. | Target professionals and wealthy class. | -| References: 1) http://en. wikipedia. org/wiki/Citigroup 2) www. personal. psu. edu/users/j/c/jcl12/Citibank_Group7. ppt 3) http://www. businessweek. com/2001/01_09/b3721170. htm 4) http://www. google. co. in/search?