CITI BANK

CASE STUDY
APO GROUP :2
Abhinav Mahajan
Anirudh Prakash
Bhavish Raj Singhvi
Meenal Gupta
Yash Yadav
 Citi bank’s credit card business with respect to the industry

• Credit cards issued - has not grown significantly with number of transactions decreasing too when we look at the
industry growth and major players.It can be as the market that CITI is targeting has a stagnant growth too
• Delinquency – Citi has been effiecient in keeping lower frauds when compared to the industry even before the CIBIL
came into play
• Branches - The bank has very few branches when we look at the number of cities ,scope the country has and other
banks numbers. Moreover ,it majorly focuses in metropoliton cities among the super affluent and affluent segment
post 2008 crisis .The domestic players have a distribution advantage
• Marketing Expenditure- It is low when compared to industry but is also as it has maintained a loyal customer base
and is focused to expand on premiums and services offered to maintain its brand and loyal customer base
• The interest fee has declined but has sustainable earning from the merchant fee alone. Also ,increasing competition
and govt. regulations led to decline in sales and transactions thus lower profits.
• Citi has segmented market in 4 classes on income while the industry now looks at credit scores after the inception
of CIBIL and via DSA for mass market
 Areas of concern

• Increased competition has led to bank’s reduction in merchant fee and waive annual fee.Also, the bank
needs to put more efforts and some new ways to maintain its niche position in super affluent and
affluent segment. The bank’s market share is also declining
• They are not able to gain profits as it’s target segment is not effected by market gains and losses and so
bank’s gains from interest fee is declining .Although there is good merchant fee profits but the cost of
maintenance is also high with its current plan
• The bank has comparatively low faulters but keeping in mind the segment it targets, it should be lower,
thus saving the expenses
• The geographic reach and expansion is low even when we consider just the urban and metropolitan
areas
 SEGMENTS

EMERGING AFFLUENT
• Bank can expense marketing in this
SUPER AFFLUENT
segment as they are looking to be a part
• Brings in more as spends more than
of the affluent class and premium offers
industry average
can make them feel so and help earn
• Require more premiums and services
loyalty.These are the growing consumer
that adds to cost for the bank
with good disposable income
• Comprise of a small percentage and
• Their delinquency is feasible and WC
not much growth in % of people that
expense low which makes them a good
falls under this –saturated growth
target.

AFFLUENT
• These are to be invested in more as
they potentially will move to super
affluent class and good offers will
promote loyalty
• Has more potential as compared to
the former has more % share and
less expense
Mass Market
• The segment has huge potential as
has 96.52% share but CITI can’t
afford the marketing expense and
branches ,hence it is a neglected
segment when comes to CITI
 RISK ASSOCIATED WITH TARGET STRATEGY
• The segment targeted has a stagnant growth as has not much profitable growth potential as with the
super-affluent and affluent segment also comes more cost in maintaining the
same(premium,rewards,etc)
• The other banks are not just targeting mass market but this segment too and because they have more
distribution and domestic bank leverage ,increase competition can posses a threat if Citi doesn’t
continue with innovative and new offers
• Only by restricting itself to two segment ,it is losing out on the opportunity to create more valuable
customers and achieving economies of scale as the emerging affluent will cover a major portion in
coming 10 years and hence
• The top 8 cities where Citi is most concentrated comprises less than 10% population so there is a
major portion that has not yet been explored
 Is the strategy helpful?

• The strategy was set up to minimize credit losses but as the literacy and consumer awareness has
increased, people now value offers that credit cards offers and the delinquency rate has declined with
the onset of CIBIL, so the bank can now expand it’s horizon and not just limit itself to top 2 class
categories
• The strategy helped them in sustainable growth but not a profitable one(that is the aim of company )
as the revenues were not increasing wrt cost incurred and were stacked against economies of scale
 Alternative target market selection strategy

• The company should target the emerging affluent segment as that requires low acquiring
cost ,has more market share ,concentrated in urban areas and will not require
• The bank instead of cross selling can focus on acquiring new customers and look for CIBIL
scores in order to reduce faulters
• The consumers in urban mainly opt for eateries and hotels and the bank can target these in
their rewards and build partnerships with major players like Taj,etc making value for
money to pull in more emerging affluent and affluent customers
• Overall the bank can target new growth segments while also increasing its reach via
branches and marketing in the geographic areas it already operates in to still be a niche
player