Alpen bank. SWOT Analysis - Case Study Example

? Case SWOT Analysis SWOT analysis is a strategic marketing tool that helps to determine the internal strengths, weakness and external opportunities,threats of an organization. Alpen Bank is a potential Romania banking organization that is popular for excellent client service. The organization has hesitated to launch its credit card services because of poor infrastructure, population inexperience and low per capita income level of the Romanians. However, they have launched this credit card service and able to win the trust of customers. In the year 2000, the organization has entered in the European market. The objective of the study is to form an effective marketing strategy in order to clear cut the positioning strategy considering the credit card industry. A strategic SWOT analysis has been implemented below for Alpen. Strengths Alpen bank is one of the leading banking organizations in Romania. The bank is popular within the country due to the effective customer service and several differentiated customer service. Due to its quality customer service the organization has able to create positive brand awareness in Romania. As it is discussed earlier, premium banking services have increased the core competencies and reputation of the brand name in the Romanian market. Weaknesses Lower customer base is the biggest weakness of this brand. The organization has implemented credit card service facilities for its clients in Romania. The concept of the credit card was not familiar with the people of Romania. The organization has hesitated to enter in this credit card service business due to the effect of recession, low per capita income of people and inexperience of the people about the credit card services. Lack of awareness and low customer base is the significant weakness of the organization. Opportunities Now the potential opportunities for the credit card service of Alpen bank can be determined by evaluating the effects of following six important environmental factors to the company. Political: The organization has tried to enter in the European Union market to increase its international client base. The credit card industry is comprised of four key parties, such as Merchant acquirers, Merchants, Card Issuers and Network & Associations. However, the banking sector in Romania is least affected comparing to the other developed countries. Strict governmental regulations and ethical policy implementation has helped the organization to win the trust of the consumers. The support of several political parties and government can increase the core competency of the organization. Economical: The organization is overcoming the challenges of previous recession. The economy of Romania has able to overcome some effects of recession. The disposable income of middle class people is increasing significantly. Initially in the year 2006, the organization was trying to enter in the EU region due to the economic advantages of these areas. However, the organization had tried to target the premium customers due to the unfavorable economic condition. The high disposable income of the people of high income level will help the organization to generate high revenue. Social: The people of Romania were not that much aware about the credit card services. Therefore, it is necessary for the organization to create social awareness about the credit card service. It is a potential opportunity for the organization to increase its market share in Romania. The organization should concentrate on the untapped market. Moreover, changing life style and improved literacy rate will help the organization to create a huge customer base within the country. Technological: Technology is a necessary aspect for the growth of this industry. This credit card facility will encourage the people of modern society. Effective and advanced telecommunication facility, computer technology and developed terminals will help the customers to operate the credit cards comfortably. Environmental: The service sector has able to hold high growth rate comparing to the other sectors like agriculture and services. Romania is one of the developed economies around the globe. Moreover, it is clear that, the banking industry has less negative impact on the environment comparing to the other competitors. Other opportunity: The banking regulation act and intervention by the central bank of country has shaped the movements of its currency to prevent a downward spiral. Threats Now the threats for the credit card service of Alpen bank can be determined relating to the PESTLE categories. Political: The low disposable income of people and unfavorable economic situation can increase several political issues and challenges for the new business operation. Economical: Due to low disposable income of people and economic downturn people will try to save more rather than spending. The Romanian economic situation is not totally overcome from the issues. Therefore, it will be big challenge for the organization. Social: Lack of social awareness about the credit card service can affect the business output of the organization. Technological: It is costly and time consuming to integrate advanced technology in the business process. Depending upon the recent financial condition of the country, it would be challenging for the organization to implement strategies. Environmental: High competition and lower penetration of merchant can decrease the consumption level of the credit cards. Other threats: Several legal policies and banking regulation can limit the business operation of the bank. Therefore, it is necessary for the bank to follow the banking rules and regulation in terms of credit card business to avoid the possible legal issues. Targeting and Positioning Targeting In the initial phase i.e. when the credit card would be in the introduction phase of the product life cycle it is more likely that there would be one of set products only. Hence it is suggested that the company should adopt targeted or concentrated target marketing strategy. By adopting such strategy the company should be looking to target the affluent customers. From a marketing feasibility point of view such a strategy would also make sense as the existing customers of the bank of Alpen belongs to the affluent group. Hence this would provide strategic advantage to the bank as the bank would already be having strong customer base (Henry, 2008). However, this strategy should be adopted for the introduction phase only. As the product would make journey from the introduction towards the maturity phase it is suggested that the company should look to make a shift in the targeting strategy. The economic growth leads to an increase in the disposable income of the people; especially in the middle class segment of the country. Such circumstances lead to a growth in the level of usage in the usage of both debit and credit card by thirty five percent as compared to the last year. Such circumstances would mean that today the people belonging to the middle class segment would most likely be the affluent customers of tomorrow. Also various studies have shown that in the emerging economies the level of stickiness that is the rate of customer switching from one brand to another is lower. Hence in the near future just like the affluent customers the middle class segment should also be a part of the target group (Kolb, 2008). Positioning The bank should position the credit card as a high end premium product as the target group, at-least for the initial time frame is the affluent class which also happens to the existing customers of the bank. Add to this, the affluent class also accounts for the top population which holds round about 24% of the wealth. Hence in the initial phase the company should adopt a positioning by brand. As already the bank is targeting high end customers it would also help the bank to position the products as premium product. However, as it has been discussed before in the latter half of the product life cycle the company may be looking to target the middle class segment. In that case the company may have to adopt a more price focused approach of price quality approach. The company may position the cards for the middle class segment as a product which has a reasonable price and provides great quality. Also the company should welcome credit cards at a lower interest rate. Also it needs to be kept in mind that the level usage in the middle income group is likely to be lower than the affluent customers. Marketing Efforts Even before describing about the marketing plan it is to be said that the product to be launched by the Alpen would a new product and it would be in the introduction phase of the product life cycle. Introduction phase is known as the stage of negative return as during this phase the product awareness would be low and hence the company may have to carry out a lot of promotional efforts to build awareness leading to cash out flow. But since the awareness of the product is low the amount of sales for the products would be quite low. Hence this stage is known as the stage of negative returns. Also the main objective of the marketers would be creating awareness among the target group (Brown, 2009, p. 209). As already mentioned that the product would be credit card; this would target towards the existing affluent customers and hence it should be positioned as a premium product to achieve product differentiation. Premium pricing strategy should be adopted by the marketers due to the market segment to be targeted. During such pricing strategy the price of the product would be kept high throughout the life cycle of the product. But as the company also have plans to target the middle class segment it would be likely that the marketers may adopt price skimming strategy for that particular market segment. In case of price skimming strategy the prices would be set higher in the initial phase, but with the course of time the prices would be reduced or skimmed off (Belch and Michael, 2005). Promotion would most certainly be the most important element of the marketing mix as the main objective of the company would be to create awareness. The most important tool to create awareness would most definitely be advertisements. The marketers should go for television and radio ads. Here it has been assumed that the company would not be having budget constraints in posting ads. A part from this the company should also be going for digital ads. The rise in internet has meant that people are spending a lot more time over the internet as compared to television. Pay per Click or PPC ads in Google and other social media platforms like Facebook would help in creating awareness as it is quite natural that people would go online to look for info about the product. Banner ads in Yahoo and YouTube would also help. Also such ads would be a lot more targeted in nature. Company should also look to go for sales promotional offers in the form of price promotional offers to increase the sales within a short period of time. Again social media platform like Twitter, Facebook can help in the promoting such offers. The company can also use direct mailers to reach the existing customers directly and to notify the customers to about existing offers or any other info so to speak. Also regular posting on Facebook and media would help the company to create customer engagement and good public relations. Also creation of mobile apps to enabling the customers to download the apps free would be real helpful for the marketers to keep in touch with the customers (Kotler, 2001). Decision The organization should target affluent customers. The organization should implement effective CRM strategy to increase its customer loyalty. In near future, the organization should target the middle class people with low interchange charges and low interest rates. It is necessary to implement low interest strategy in order to increase the customer base. Moreover, the organization should create awareness about the credit card service among the people of Romania. The organization should position a new credit card for the middle class people by reducing the credit limit. The economic growth leads to an increase in the disposable income of the people; especially in the middle class segment of the country. These circumstances lead to a growth in the level of usage in the usage of both debit and credit card by thirty five percent as compared to the last year. Capitalizing the social and economic opportunities will help the organization to increase its customer base. References Belch, G., and Michael, G. (2005). Advertising &Promotion-An Integrated marketing Communications Perspective. London: McGraw-Hill. Brown, L. (2009). Marketing and Distribution Research. London: Ronald Press Company. Henry, A. (2008). Understanding Strategic Management. Oxford: Oxford University Press. Kolb, B. (2008). Marketing Research: A Practical Approach. London: Sage. Kotler, P. (2001). Marketing Management. London: Prentice Hall. Read More