Lapel should focus on selling them premium debit cards instead of credit cards. The reason we choose to focus on debit cards is that wealthy peoples consumer behavior are reluctant to use credit cards since they pay more attention to their fiscal management in order to pay less on interest rates etc. We have calculated pessimistic expected revenues of using Branch Cross Selling method. As we can see from Exhibit 1 the number of customers of Lapel bank reached 201000 clients in 2005. By applying the information given on Table B. 201000 x 50%x 90%=90450 expected number of cards that can be sold.
Using Information given in Table A we can take minimum of 123. 38 revenue Euro per card holder because most of existing clients were affluent and most affluent class. 90450 x 123. 38= 11 159 721 euros (11. 1 millions of Euro) . In 2005 total earnings of Lapel Bank Romania was 16 millions (Exhibit 1) . That is over 65% of current earnings. Focusing on affluent class had additional 4 positive aspects: 1. Fluent clients are more like to pay their credits in time that in fact would help the bank keep the its credit card utilization rate low.
As we can see in the Exhibit 4 some Romania Banks especially foreign rep banks had high credit card (up to 70%) utilization rate. Higher utilization rate affect banks liquidity. Affluent Clients can be used as free advertisement. Researches show that wealthy consumer choices can impact middle and upper middle class consumer behavior. 3. It would be consistent with Lapel Banks brand positioning since it was positioned s premium bank which offering services as private banking and wealth management. . Affluent Clients automatically assumes good lobby and networking. Recommendations In order to attract affluent existing and potential clients Lapel Bank should start extensive work with merchants at the “initial phase” in luxury segment : It should start negotiations with retailers and service providers in luxury segment to offer Lapel bank premium credit and debit card holders special discounts ( in addition to “interchange” discounts ) and concierge services (in fact this would be the only way to attract wealthy potential clients ).
As an example can be used Visa Platinum , American Express Black Cards, Stratus White card, Priority Pass Cards, Virtue and Quintessentially services, etc. In return, the Bank should promise to the merchants more traffic and consumer forwarding to their businesses. After successfully introducing Lapel Banks premium credit and debit cards into Romania market, Lapel Bank should start second phase of market entry – “Maturity Phase”.
This phase assumes successful implementation of initial phase: high response rate among affluent clients (approximately 100000 persons using BRANCH CROSS SELL method), high customer satisfaction and loyalty rates. At this phase Lapel bank should focus on attracting mass middle class (annual income 3000-4500 euros -TABLE A) by using primarily Free Standing Inserts method (the reason is that it had higher response efficiency rate and lower cost per reached potential client 1 1. 1 euros -calculated above from Table B) and “Take-ones” (. 13. Euro per reached client) Although Branch Cross Selling method had lower cost and high response rate, we can not use this method with middle class because it assumed to be efficient with only existing customers who entered the branch of Lapel Bank. Lapel bank should position it’s middle class credit cards as “Transformational Card” for future affluent class. For successful implementation of this project the bank will be required to cooperate and build good business network with businesses in retail food chain (supermarkets), restaurants , and middle class service providers.
We would strongly recommend to Lapel Bank to use indirect marketing strategy also. Because we all now that mid asses were an era of introduction advertisements through social networks. Indirect marketing is social media accounts, blobs, and newsletters, that don’t try and sell you anything. These tactics allow you to build customer trust and loyalty, and allows you to build a rapport with potential customers by not shoving pushy sales pitches on them when they are interacting with you.
In fact, positive interactions on social media can lead to your audience base being converted from Just potential customers to potential brand evangelists. Indirect marketing leads to this by providing a personalized point of contact from your business to them (source taken from wry. Surveying. Com ), lower advertisement costs, more accurate target hunting meaning you can choose starting from gender, age ending up with nationality and sexual orientation)
