Rana Talwar, head of Citibank's Asia Pacific Consumer Bank, must decide whether to enter the credit card business in earnest
in Asia; currently, Citibank participates on only a limited basis in Hong Kong. Various country managers have argued against this option, and there is concern that making a Citibank credit card accessible to large numbers of people would dilute the image that the card has among its current holders. On the other hand, Citibank has adopted a global strategy with regard to its credit card business and currently has a noticeable lack of pre-sence in Asia. Talwar must determine whether to enter the credit card market, how to accomplish this, and which countries would be most appropriate to target with Citibank services.
Using the limited data currently available, it is possible to approximate break-even calculations for the Asian market. Based on experiences in Singapore, the following cost per
advertising channel emerges on a per-customer basis (it is important to remember that some customers have multiple cards within their households):
Direct Mail 1.5 300000 0.02 4000 3200 140.625
1.5 1.5 300000 0.02 4000 3200 140.625
3200 1.5 300000 0.02 4000 3200 140.625
Direct Sales 0.25 2,000,000 0.015 10000 8000 62.5
Bind-Ins 0.15 3,000,000 0.01 10000 8000 56.25
This results in an average marketing launch cost of $52.13 per customer.
In addition to marketing costs, there are direct costs which are $25 per customer up to one million customers, and $8 per customer over one million. Infrastructure costs run $35 million for the first 250,000 and $15 million for each addi-tional 250,000 customers. Advertising costs for each country are expected to run $2.5 million per market. Each of these estimates are conservative, meaning that the highest values are taken when multiple values are available. Using revenue figures from the Hong Kong market, customers can be expected to produce average revenue...