Alpen Bank: Launching the Credit Card in Romania
1. If Alpen bank does in fact decide to launch a credit card, there are a variety of positions it could take. Given their reputation however as a higher income bank, I believe Alpen should target their current affluent customer base. By positioning their card in the higher income segment of the Romanian market, they will have the ability to charge a higher joining fee/ annual fee because the consumer will not weigh the decision as much as someone from the middle class. This means higher per-ticket spending and therefore break even more quickly as well as profit in time. Most importantly it does not change the perception of their brand as high end banking. The last result they ...view middle of the document...
2 cards per household, most cards being debit. From this information it would seem that if launched, the card may not get used to its full potential. The target market for such a credit card would be those making 4,500 Euros a year and above, roughly 28% of the current population. This would insure higher per-ticket spending, a clientele with greater knowledge of credit and sync with the current perception of the bank’s premium image.
3. The cost of customer acquisition will be how much the total cost is to complete the market entries the firm sees fit to implement. If they were to use direct mailing it would cost about 625,000, take one-200,000, FSIs- 175,000, direct sales (assuming ten sales reps)- 30,000 and finally branch cross-sell- 50,000. Although they have a high response rate, FSIs and the take one approach do not seem logical because only 30% of those reached qualify for the card. Direct mail will reach the intended audience but cost the most at around 1,250,000. Direct sales requires an investment in sales reps and lower audience reached but higher knowledge will be provided leading to a quarter of those targeted responding. Finally, branch cross-sell yields a high response rate, is cheap and 90% of those reached will qualify. Between these strategies, direct mail and branch cross-sell appear to be Alpen’s best options to acquire customers. Direct mail, although expensive, reaches a very large amount of prospects which will be needed to kick start this cards popularity and make the market aware of it. The high cost of direct mail can be combated by supplementing it with branch cross-sell. It’s cheap and will is guaranteed to reach the target market according to the percent response and percent qualified.