Analysis: Alpen Bank - Case Study Example

? Case Study Analysis: Alpen Bank Table of Contents Table of Contents 2 Introduction 3 SWOT Analysis 3 Targeting and positioning 6 Initial Target 7 Next phase target 7 Marketing Efforts 7 Porter’s three generic strategies 7 Ansoff’s Matrix 8 Decision 10 Name of the Student: Name of the Professor: Name of the Course: Date: Introduction The case study deals with the analysis of the business strategy of the launch of credit card in Romania by the Alpen bank. The bank has planned for a business strategy to launch a credit card in Romania but only if it can bring in a profit of € 5 million in the consumer bank segment. There has been a hesitation in the launch of credit card in Romania because of the low per capita income in the country, the poor infrastructure and the inexperience of the maximum population in using the card. However, Carle has made the plan to finally launch the concept of credit card in Romania. While launching the new concept there are various areas that should be taken into consideration by the bank and the management team. They are: the target audiences, marketing efforts or strategies to be planned for targeting the audiences etc. Before considering those factors, a SWOT analysis of the bank should be performed to understand the present scenario related to the bank’s operations. The first part of the case study deals with the SWOT Analysis of the Alpen Bank. SWOT Analysis SWOT Analysis is an important element for strategic planning. SWOT Analysis will help to understand the strengths, weaknesses, opportunities and threats of Alpen bank. Strengths The loyalty of the affluent customers is the biggest strength of the company. The bank has been successful in providing satisfaction to the customers through its excellent services. The bank provides premium banking service to its customers. It is one of the leading international service providers which have presently expanded its operations in more than twenty different locations in Europe. Apart from various kinds of deposit and advance schemes, Alpen Bank offers wide range of financial products and services including wealth management services, financial planning and various investment products to its customers. The bank has organized a new leadership team with all experienced and talented members. The main focus of this team is to provide the customers with innovative services and also access operations to various new growth market segments. As the affluent customers are the suitable and easier segment for targeting, it helps in bringing higher revenue to the bank. The bank provides services to the customers, which is less price-sensitive and easily attracts the rich and the wealthy section of the society. Alpen bank promotes credit cards consistently. This concept is attractive and easily acceptable in most of the developed European countries. Weaknesses Alpen bank mainly used the concept of credit cards in its business operations. But Romania lacked the potentiality required for the growth of this concept as compared to the other emerging markets. The inability and inexperience of the customers in managing the credit card have been one of the weaknesses which prohibited the entry of the credit card business concept into the country previously. The customers who were the card holders of the bank used the card for cash withdrawals mostly rather than making purchases and increasing the profitability of the company. The bank had to make huge investments related to the advertisements, direct marketing, and maintenance of proper infrastructure. The country has suffered badly from a tough period of three years of recession. Thus the bank had to suffer from tough conditions too. Opportunities The opportunities can be segmented based on the political & legal, economical, social, technological, environmental and other factors. Political & Legal Romania, the operational market for the bank, made an entry into the European Union. This can be counted as one of the most remarkable opportunities for the bank in expanding its operations into various other European countries. Moreover the entry of Romania into the European Union and implementation of various legal rules and policies in favor of the adaptation of the credit card concept by the Alpen bank increased its opportunity to raise its profit margin. Economical The country has almost overcome the recessionary phase and there has been an increase in the disposable income among the customers. This is an opportunity for the bank. There has been a substantial development of the infrastructure required for the payment system in the country as such which is evident from the fact that there were around 800 ATMs and 150000 point of sales terminal for card transaction in Romania. Alpen Bank has already managed to achieve significantly high market share among the affluent segment of customers in Romania. Increasing income inequality and high rate of credit card utilization among this segment of customers offer the opportunity of high revenue generation from credit card business from the existing customer base. Social There has been a shift in the buying pattern of the customers in Romania from normal goods to luxury good. As the bank provides premium banking services to its customers, so the changing purchasing pattern of the buyers can increase the opportunity of the bank in bringing in more customers and increasing the profit of the bank. The preference in the use of cards rather than using cash increased the scope of the bank for the introduction of the credit card concept in Romania. Thus the social behavioral change among the buyers contributed to the increasing opportunities and scope for the Alpen Bank. One third of the households in Romania are interested in making branded imports which can be an opportunity for the Alpen Bank. The affluent as well as the middle class households can be an easy target for the bank to earn a good amount of revenue. Technological The significant increase in the total number of ATM’s and the use of card swiping machines by various merchants in the country provided an opportunity for the bank. Threats The threats can also be segmented based on the political & legal, economical, social, technological, environmental and other factors. Political & legal The entry of Romania in European Union can have a negative impact on the economy of the country if Europe does not recover from the debt crises situation completely. Economic Presently, the purchasing power of the customers in Romania is not very high. If the situation deteriorates further, then it is a reason of threat for the bank in achieving the targeted profit. Compared to other eastern European countries Romania lacks infrastructure and technology adoption which are the major growth drivers for credit card business. Social There has been a social behavioral change in the customers of Romania presently related to the purchasing pattern of the products. However, if the net disposable income of the customers does not increase then this can result in the change in their purchasing pattern but in the negative direction. Middle-class households are considered to be the potential credit card customers in Romania. Trend of low utilization of cards among these customer segment pose the threat of significantly low interest income for the bank. Technological If the new technology of credit card fails to achieve success in Romania, then it will result in huge losses for the bank. Others Alpen Bank would face stiff competition since other competitor banks are already active into credit card business in Romania. Targeting and positioning Initial Target Alpen bank should initially target the affluent customers. The bank should target the existing customers and also attract the new ones by providing them with premium products initially. These affluent customers do not consider ‘reasonable price’ as satisfactory factor to influence them in their purchasing decision, rather their purchasing decision gets influenced by the high quality and premium products. There is a perception among the affluent customers that products with high prices give high value for the money invested in purchasing them. Next phase target The next phase target of the bank should be middle class customers along with the affluent existing customers. After making a good amount of revenue income from the affluent customers, the bank should also make plans to target the middle class customers by offering them with low interest rate charges. While targeting the middle class segment it should be kept into consideration that this segment is price focused and will welcome the new concept only if the offering is made at low interest rate charges. It is also expected that the middle class segment will develop in future and their disposable income will increase. Consequently, this will increase their purchasing power and they will be able to purchase the premium products offered by the bank. Marketing Efforts The bank should now plan for strategies that will help to adapt the credit card concept in Romania. Porter’s three generic strategies There are three main strategies in porter’s three generic strategies which help to maintain competitive advantage over the competitors. Cost leadership strategy: It is the strategy of increasing the profit by decreasing the cost of the products and services. It involves increasing the market share by lowering down the prices of the products in the market. Differentiation strategy: This strategy involves making the product of the company different from its competitors by offering products and services more attractive and different from those offered by the competitors. Focus strategy: It is the strategy where a company focuses on the niche market segment as understanding the dynamics related to that market segment will be easier. After understanding the dynamics of that market, the company can understand the needs of the customers easily and offer products based on their needs to provide them satisfaction. Strategy to be adapted The bank should adapt the strategy of focus differentiation while implementing the idea of credit card in Romania. It will involve differentiation in the product offerings of the bank after targeting a particular niche segment. Choice Rationale Advantage Implementation Focus differentiation strategy. The strategy of focus differentiation will help Alpen Bank to strengthen its position in the industry and also achieve competitive advantage over its competitors by focusing on the targeted niche segments and providing them with high value and diversified products as compared to the competitors. It will help the bank to easily understand the dynamics of the targeted niche segment of customers leading to the better understanding of their preferences and demands. If products are offered after proper understanding of the needs and demands of the customers in the niche segment then it will attract many new customers towards the bank and also retain the existing ones. The bank should at first target the affluent customers in the market and provide them high end and premium products which are differentiated from the product offerings made by the competitors. The middle class segment will get attracted to the products of the bank only if they are offered at low interest rate charges. Thus they should be offered highly differentiated products at low interest rates for this segment. Ansoff’s Matrix It is a four grid matrix suggesting various product and market growth strategies. There are four strategies offered by this growth matrix. Market penetration: It involves selling existing products in the existing markets. Market extension: It involves selling or marketing existing products in the new markets. Product development: It involves marketing new products in the existing markets. Diversification: It involves selling new products in the new markets. Strategy to be adapted The bank should adapt the strategy of product development. Choice Rationale Advantage Implementation Product Development It will help the bank to achieve competitive advantage over its competitors by offering new products which are highly diversified as compared to the product offerings of the competitors. It will bring in new customers and retain the existing ones. The product development strategy will help the bank to restrain its competitors from copying its product line. Premium product offerings should be made to the affluent customers and high quality products with low interest rate charges should be offered to the middle class segment. Decision After the analysis of the entire case study, it can be concluded that the bank can take the decision of introducing the credit card concept in Romania. By targeting the affluent customers initially and providing them with the premium products, the bank can achieve the target of earning revenue of €5 million within two years. In the next phase it should target the middle class segment along with the affluent customers. Read More