Case Notes Citi
Citibank Case Analysis
Citibank: Launching the credit card in Asia Pacific
Country entry strategy
Objectives of this case ...
q To understand market evaluation, target market selection, and product positioning issues in services operations. q To appreciate globalization/country entry issues in financial products. q To understand the underlying economics of customer acquisition and retention.
Key Strategic Issues qShould Citibank launch the card product ? Why ? Why not ? qGiven the upscale customer base , how should Citibank position its card, if it decides to launch it ? qWhich countries should Citibank enter first? Which countries should it avoid?
Few More Operational Issues qHow should Rana Talwar convince his country managers and H.Q to accept the card product? What Organizational mechanisms does he have under his control? qIf you choose not to introduce the card, what do you do to achieve the $100 mio. earnings target by 1990? What kind of Branch banking products should the bank offer?
Economic Analysis
q How many card customers does Citibank need to break even on its investment ?
Economic Analysis
q First step is to ascertain the credit card revenue per customer of $163 (table B page 6) qOptions available: - assume Hong Kong experience as “typical” of the region. - If we have to target affluent with premium positioning you may use $250/ customer - for mass market strategy take $140/ customer
Cost component of analysis qThree parts : § Variable cost of customer acquisition. § Variable cost of customer maintenance. § Fixed cost of regional card center.
Variable Cost Of Customer Acquisition
Refer to Table A
qAll assumptions should be drawn from the paragraph preceding Table A. q The “effective customer acquisition rate” (customers/prospects) is a measure of the effectiveness of each of the marketing program component.
§ For example, 27% of direct sales prospects actually become card holders , while 0.3% of
Citibank: Launching the credit card in Asia Pacific
Country entry strategy
Objectives of this case ...
q To understand market evaluation, target market selection, and product positioning issues in services operations. q To appreciate globalization/country entry issues in financial products. q To understand the underlying economics of customer acquisition and retention.
Key Strategic Issues qShould Citibank launch the card product ? Why ? Why not ? qGiven the upscale customer base , how should Citibank position its card, if it decides to launch it ? qWhich countries should Citibank enter first? Which countries should it avoid?
Few More Operational Issues qHow should Rana Talwar convince his country managers and H.Q to accept the card product? What Organizational mechanisms does he have under his control? qIf you choose not to introduce the card, what do you do to achieve the $100 mio. earnings target by 1990? What kind of Branch banking products should the bank offer?
Economic Analysis
q How many card customers does Citibank need to break even on its investment ?
Economic Analysis
q First step is to ascertain the credit card revenue per customer of $163 (table B page 6) qOptions available: - assume Hong Kong experience as “typical” of the region. - If we have to target affluent with premium positioning you may use $250/ customer - for mass market strategy take $140/ customer
Cost component of analysis qThree parts : § Variable cost of customer acquisition. § Variable cost of customer maintenance. § Fixed cost of regional card center.
Variable Cost Of Customer Acquisition
Refer to Table A
qAll assumptions should be drawn from the paragraph preceding Table A. q The “effective customer acquisition rate” (customers/prospects) is a measure of the effectiveness of each of the marketing program component.
§ For example, 27% of direct sales prospects actually become card holders , while 0.3% of