Marketing Analysis Situation Overview Citibank Term Paper

Pages: 10 (2644 words)  ·  Bibliography Sources: 0  ·  File: .docx  ·  Level: College Senior  ·  Topic: Economics

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Further more, the bank seems to have succeeded to manage and overcome the difficult legislative and regulatory problems that some of these countries had and has implemented quite well on the banking market.

On the other hand, the NO solution would have several important disadvantages. The main one, in my opinion, is the fact that such a solution does not provide a sustainable plan for long-term growth. Indeed, it is viable to believe that the banking market, profitable as it may be, will still be reaching a certain saturation level at a point or other. This level will not necessarily mean that banking will become unprofitable, but simply that revenues will tend to remain at a certain given level.

Additionally, this solution has the disadvantage that it keeps Citibank out of a market that will constantly develop in the future, with the increase of the middle income category in the Asia-Pacific area, and the overall disadvantage that it is simply too inclined towards risk aversion.

The solution that implies entering the credit card business has several advantages and disadvantages worth mentioning. First of all, mainly all the disadvantages for the non-entry situation can be called for here as advantages. The most important one, in my opinion, is the fact that Citibank will be able to develop a long-term revenue growth, by diversifying its business. Additionally, it will be able to profit from a constantly expanding credit card market in countries that have a growing economies and great potential.

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In terms of disadvantages, there are several worth mentioning. First of all, the costs associated with such a move. In the case of a failed situation, these are simply too great and the entire Citibank operations in the Asia-Pacific may be affected by overall profit decrease. In this unwanted alternative, a possible loss occurring from the credit card market may destabilize the banking activities.

Term Paper on Marketing Analysis Situation Overview Citibank Assignment

On the other hand, the area we are referring to comprises a set of different countries, with different backgrounds and cultures. This means that the credit card program and its implementation needs to be carefully evaluated for each country in part. It is most likely that you are not going to enter the credit card market the same way in India as you would in Hong Kong. There are too many differences to be taken into consideration, related to infrastructure, population, etc.

Another issue worth considering is the existence of the upper and middle income consumer category that Citibank will be targeting. Indeed, looking at Exhibit 8, we may have the general impression that the majority of the population in the Asia-Pacific area has an income below $2,000 per year. This is the case for India and Indonesia, where 90% of the population is in this situation, and also for countries like Thailand or Singapore, where the level is up to 55%. So it seems to me that the existence of the market segment that the bank is targeting may be rather questionable.

This is why I am proposing a third alternative solution that may be used instead of the other two. Citibank may enter the credit card market in specific countries of the Asia-Pacific area, countries where the conditions for this are right and where the maximum benefit may be obtained. Australia seems the best choicer in this sense, for example. The country has a developed infrastructure and a solid segment of consumers with high income (most of them over $6,000 per year), so it is quite obvious that it would be a profitable action. Taiwan and Malaysia also seem natural choices, in terms of income level and infrastructure.

The most important disadvantage I see for this solution is the fact that, generally, the poorer countries with a low income level, also have a high population, which represents an excellent potential market. This is the case both for India and Indonesia. We can only imagine the Indian market, with over 1 billion consumers, while Indonesia ranks in top ten in terms of population.

So, where on one side more economically developed countries are an excellent place to launch the credit card operation, these generally may prove less profitable than the poorer, more populated countries. Citibank will need to make clear evaluations on the opportunity cost before adopting this third alternative solution.

There are also several decisions to be made in terms of pricing, market entry, etc. In terms of market entry, the bank can decide on a greenfield operation or by acquiring an already existing card portfolio or something in between. The acquisition decision would facilitate an easier penetration and would benefit the bank from a set of already existing relations formed and brand. On the other hand, the portfolio that will be acquired may not fully match the bank's existing needs and its targeted market.

The Greenfield market development solution is possibly more costly, because Citibank will need to invest in the marketing program and the infrastructural support. However, in my opinion, the main advantage would be the ability to decide from the very beginning a course of action and a mechanism that is viable for the bank and its activity.

The pricing strategy for Ciribank's credit card seemed to be the most controversial issue. The premium pricing strategy implied a tough competition with local actors, who generally gave away at very low prices or for free credit cards. On the other hand, Citibank was Citibank and premium pricing did not necessarily mean offering more services, but respecting a brand and entering the low paying market zone would perhaps somewhat reduce this.

Optimal solution

In my opinion, the third alternative solution may be adapted to fit the other issues at hand here. According to this, the penetration strategy should be adapted to each market in part and, in some cases, the respective markets may even be avoided.

Citibank needs to perform a keen evaluation of what each market represents and what its characteristics are. For example, I have mentioned India. The country has a large population, which means a large potential market. On the other hand, there are infrastructural problems, instability in several regions, etc. Do these problems represent a higher cost than the benefit deriving from the positive aspects? These are questions that Citibank needs to find answers for in the case of each country in the region.

Additionally, for each country in part the penetration strategy needs to be adapted. For example, in India, one may decide upon starting a Greenfield market development, because it is to be expected that costs are somewhat lower here than in other countries in the area. On the other hand, Hong Kong may perhaps be a place to purchase an already existing business.

So, in my opinion, the key word for Citibank's future strategy should be adaptation. Every… [END OF PREVIEW] . . . READ MORE

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