SDM INSTITUTE FOR MANAGEMENT DEVELOPMENT

Alpen Bank
Launching Credit
Cards In Romania -A
Case AnalysisService and Customer Management

Submitted to:
Professor Mohan N.J. Monteiro

Submitted by: Group-1_Section-C

Aastha Vyas
12001
Ankita Dhandharia
12067
Soham Bhattacharya 12109
Kumar Piyush
12145
Sarthak Rohatgi
12182

Date of Submission:

THE CASE
The case debates about the challenge Gregory Carle, the country manager of Alpen bank
faced while launching credit cards in Romania. There are many factors to take into
consideration and if it is decided to be launched, Carle also needs to decide how it should be
positioned in the market. The firm had rejected the idea several years earlier due to poor
economic conditions in Romania. However, Romania now is experiencing a period of
economic growth after joining the European Union and Carle believes it is time to reconsider
the opportunity despite continued scepticism within the company.
Gregory Carle, the country manager of Alpen bank needed to make sure that if launched, the
credit card division needed to generate 5 million within two years. Alpen Bank had over
200,000 customers in a country of 7.7 million households. Total disposable income in
Romania had increased due to rapid economic growth and rising incomes in the country. In
2006, total financial cards including both debit and credit cards, grew by 35% over the
previous year. There were an estimated 9.5 million cards in circulation in Romania, with 8000
ATMs and 150000 points of sale terminals for card transactions. Alpen Banks current
customer base was largely affluent households and an easier segment to target. Top 10% of
the population in Romania had 24% of the countrys wealth with their average net incomes of
500. Alpen Bank wanted to focus on the middle class segment that earned 200 monthly,
and comprised of young professionals and families that valued quality. Revenues in card
industry are determined by transaction volume. Sources of income that Alpen Bank was
contemplating through card business were annual fees, penalty fees and interest income. A
consumer behaviour study indicated that over one third of Romanian households were likely
to purchase branded imports from the EU rather than low priced domestic products, with a
growing interest in luxury goods.

Alternatives

Target Existing customer base (Affluent Customers)

Target Middle class and Affluent both

QUESTIONS
Question 1: What level of customer acquisition would be required to break even, and how
quickly the business would generate profit beyond break even?
Solution: The process of determining revenue potential from Alpen Bank case is based on
determining revenue potential per customer segment and then determining the overall value
per customer. (Quantitative analysis done in Excel)
Question 2: How should the new card is positioned particularly given the current upscale
customer base?
Solution: Regarding the positioning strategy, the company should emphasize on its current
strength since its easier to sustain the current brand image rather than build a new one. Alpen
already has an excellent affluent client base, and it can leverage it to build on its reputation.

Question 3: How would the credit card opportunity compare to focusing on the core business
of banking services for the affluent?
Solution: The Company has an exciting opportunity to introduce the credit card business in
the country. The bank has been successful in establishing and sustaining itself in the core
business of banking services with a strong client base of 200000 customers, and with a
population of 7.7 million, the figures indicate that Alpen Bank has fairly been able to
penetrate into the banking industry. The macroeconomic factors of the country indicate that it
is ready to step on to the growth pedestal; therefore it is essential for Alpen Bank to recognize
the growing importance of providing a variety of services to target existing as well as new
customers. By doing so, the bank will be able to acquire more customers and therefore
improve its business. Also, the bank can hire more staff to ensure that both the core banking
division and the credit card division operate smoothly. The fact that the bank has an
established affluent client base, it can indulge in cross selling where the existing customers
can first be targeted to sell the credit cards.
Therefore, the core banking service that the banks current client base can act as a leverage to
generate more revenues and attract new customers.