Essay About Alpen Bank And Middle Class

Case Analysis for Alpen Bank
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Case Analysis: Alpen Bank
The main issue that Alpen bank is facing is whether or not they should launch the credit card business in the
Romania market and which group of target audience they should select while applying the launching strategy.
Moreover, specifically to Carle, he needs to come up with a program from which, Alpen bank can generate at
least €5 million in profit within 2 years. Moreover, clarified positioning strategy and customer segmentation is also
needed to secure the success of the program.
In the case, it seemed that Alpen had the opportunity to act since economic environment in Romania had
changed from 2006 after its entering into the EU: the economy there was developing; a growing trends of luxury
purchasing emerged; there was also an increasing likeliness of using card instead of cash; other competitors had
already taken similar strategies in the market; Alpens traditional banking business had a great penetration
throughout the country, etc. However, such a growth was not enough compared with other countries of the
region. Besides, to launch the credit card business in Romania might be risky and do harm to the customer base.
Then what should Alpen do?
According to the charts 4 & 5 in the appendix, regardless the target audience, launching credit card business in
Romania is profitable with the premise that if the customer base is big enough. (All the calculations in the charts
were based on revenue potential and acquisition costs.) Comparing between the 2 options, it seemed that
choosing affluent customers only would be easier to achieve since number of the required customers of
breakeven point with a ROI of 5 million is smaller than that of choosing both middle class and affluent customers.
Moreover, as customer base grew, profits of selecting affluent customers only were bigger than those of selecting
both middle class and affluent customers because of the fact that there was significantly lower card utilization for
middle-class customers. Thus, in order to successfully launch the credit card business into Romania, Alpen bank
needs to pick its target audience which is composed of affluent customers only. However, all of these are based
on the premise that Alpen can acquire enough customers within 2 years; otherwise, it will lose money.
Nevertheless, there was a promising fact in the Romania market that those affluent customers were more likely to
at least try Alpens cards.
Then considering marketing strategy options, Alpen should focus more on direct sales and branch cross-selling,
since their costs per customer (relatively €3.61 and €2.92) are significant lower than those of other 3 tools.
Moreover, direct sales and branch cross-selling will work more efficiently since they have much higher effective
hit rate than the other options regardless the target audience choices. Thus, these tools can provide a flexible
space for Alpen to move on to other potential strategies in the long-term.
Regarding the positioning strategy, Alpen should emphasize on its current strength since it is much easier and
safer for a brand to maintain its current image rather than explore a new one. Alpen has already established the
reputation for excellence in serving affluent clientele. With such reputation and brand awareness among its target
audience, Alpen seems to be more likely to make profits with launching its credit card business into Romania
market.
APPENDIX
REVENUE POTENTIAL
The process of determining revenue potential from the Alpen Bank case is based on determining revenue
potential per customer segment and then determining the overall value per customer. First, determine the
relative value of each segment. Find the number of potential cardholders by segment and weight the value of
each segment by calculating the percent of the total potential cardholders each segment represents. (e.g. the
middle class is 18.2% of the total population and 39.53% of total potential cardholders). The Annual Revenue
per Middle Class Cardholder is €60.63. Calculate the share of total revenue potential accounted for by the
Middle Class. Complete the exercise for each segment and total to determine the average annual revenue per
customer.
Romanian Market | Revenue per Cardholder |
| Romanian Market | Revenue per Cardholder |
Segment | Annual Income
€ | % of Potential Cardholders | Potential Cardholders (MM) | Interest Revenue
€ | Other Revenue
€ | Annual Revenue
Middle Class | 3,000-4,500 | 18.2 | 3.39M | 37.13 | 23.50 | 60.63 |
Affluent | 4,500-6,000 | 15.0 | 2.79M | 86.63 | 36.75 | 123.38 |
Most Affluent | 6,000+ | 12.9 | 2.40M | 148.50 | 61.25 | 209.75 |
Annual Revenue per Cardholder (all customers) | €122.78 |
Annual Revenue per Cardholder (Affluent + Most Affluent) | €163.31 |
ACQUISITION