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Citibank’s Credit Card Business

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To: Harpeet Grewal

From: Akshay Madhogaria

Re: Citibank India Case

Date: 11/01/2015

This purpose of this memo is to recommend a new strategy and a new market segment for Citibank’s credit card business.

Citibank should start targeting a broader market segments in the major metropolitan cities, starting with the emerging affluent and then the mass market. Its current target market strategy aligns with its goal of profitability. However, if Citibank continues with the same strategy it will face the risk of being a small player in a rapidly growing market, potentially losing revenue. Citibank’s position in the super-affluent and affluent segment remains strong, but its decreasing market share combined with the growth of the emerging affluent and mass market suggests that Citi bank requires a change in its strategy.

Citibank has a fairly lower growth rate than the industry, from Jun 2010 to Dec 2012 it has been 22% for Citibank and 45% for the industry. Citibank’s current strategy targets only 0.68% of the total households in India, and 7.58% of total households in the top 8 cities. By targeting just the super-affluent and affluent market, Citibank is currently letting its competitors to capture a large population of the market. Citi bank potential market in the top 8 cities is nearly 69.7 million households (See Exhibit 1). These are the cities where they already have a number of branches and a strong presence. So by targeting the emerging affluent and mass market in the top 8 cities, it will not require to go through the hassle of setting up new branches. Also the revolving balance percentage for the emerging market and mass market are 45% and 65% respectively.

The risks that are associated with targeting the emerging affluent and mass market are:

  • Delinquent balance percentage proposed target market, 4.5% for emerging affluent and 6.7% for mass market, is greater than its current targeted market, 2.5% for super-affluent and 3.3% for super-affluent (See Exhibit 2).
  • Unlike its current target market, the proposed market is a highly competitive market.

The best strategy while entering the two markets segment is to offer a customized credit card deal that will be based on the customer’s needs. We can offer cash backs, discounts and points system on groceries, fuel and on other basic amenities that will influence people to shift to Citibank’s credit card. Instead of providing free credit card, we can state that their card fee will be waivered if their spending exceeds a specific amount. This will encourage customers to use their credit card more. Finally to reduce the risk factor, we can use the CIBIL score to assess the risk of issuing a credit card to a particular customer and setting a credit limit based on their income.



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