New strategies for credit card market during recession: Focus on Citibank

Abstract

Credit card market is growing at a phenomenal rate in India. Due to its huge market potential there are several players in the market with aggressive penetration strategy. Credit card industry is based on the consumer spending behavior and increasing disposable income for youth below 30 years. Citibank is one of the major banks offering credit card service and it has the second largest base in the world after AMEX. Citibank has a variety of offerings based on the customers’ needs and wants. In India they have tied up with many other brands for privilege cards. Apart from that based on the customer profiling they come out with different offerings. But as recession set in consumer spending behavior has changed and hence the demand for credit cards has also gone down. On the other hand demand for debit cards have gone up. Citibank needs to revaluate its value proposition under such conditions. So an extensive customer (credit card holders) survey was done along with a focus group discussion. The result of the survey was to find out the parameters that are most important for customers to choose a credit card. Other factors that affect the usability and serviceability of a credit card were also determined. Finally the parameters were grouped into dimensions of serviceability and rewards and benefits. All the competitor banks in India were mapped across the dimensions based on the survey to get a picture of the strength and weakness of their strategy. Citibank was found to be lower on rewards and benefits but good at serviceability. Hence the revised strategy for Citibank during recession revolves around superior rewards and benefits. Citibank caters to a niche segment of customers who are driven by the brand value of the credit card. Hence the offerings to the customers were made according to their lifestyle and premium privileges. From the customer survey it was gathered what kind of fringe benefits attract the customers most in this segment.