India, Indonesia, Malaysia, Philippines, Singapore, Thailand and Taiwan (Yes)

The economies of these countries are growing along with their infrastructures. The countries
have a low per capita income, yet this is due to the fact that wealth is basically concentrated
in the extremely rich, upper middle and emerging middle classes. Citibank's added value
services in these countries already include the innovative NRI program; this program helped
Citibank develop relations with the Indian government by helping its Central Bank procure
foreign currencies. Citibank, moving forward will have to implement a two-pronged approach
in these launches. The first product, a Citibank classic card can be geared toward the
emerging middle class. The features and benefits of this product can include wide acceptance
in the country without carrying cash and payment options. The second effort would be geared
to the upscale customers that the Citibank is already doing business with. The features and
benefits of a "preferred card option" would include: no pre-set spending limits, gold option
(with 100,000 minimum relationship balance.) . This two-pronged effort differentiates the
cardholders by status and doesn't turn our card into an everyday commodity. This must be
kept in mind in the Asia Pacific Rim markets, as credit cards are status symbols. The
marketing strategies utilized by these countries based on economies of scales issue can in
fact be implemented very similarly.
Australia and Hong Kong (Yes)
Being more developed markets with westernized infrastructures and similarities to
The U.S. credit card marketplace, the products offered in these countries must have more
diversification. In Hong Kong partnerships with local banks, healthcare associations and the
like can add additional benefits of medical care, free cash rewards preferred credit limits and
gifts. These options can be marketed as well in Australia.
Korea No (But Possibly in the Future, around 1997)
Based on the local regulations that don't permit banks to issue cards with revolving credit
Also, due to strict foreign exchange control measures only local currencies cards could be
issued. Yet in all other countries we are issuing the option of U.S. Dollars and the local
currency. Until diplomatic relations solve this trade issue and "open up" this government to the
benefits and conveniences of credit cards, we at Citibank will not move forward in this
particular marketplace.
Break-even Analysis for the Nine Targeted Asia Pacific Rim Marketplaces
Customer Acquisition Analysis Table One: To Obtain 500,000 cards
Channel Unit Cost Prospects Reached Response Rate
Direct Mail 1.5 2.7 million 2%
Take-Ones 0.25 18 million 1.5%
Direct sales 18,000/100 sales person 270,000 50%
Bind -Ins 0.15 27 million 1%
Total Costs: 14.4 million
Fixed Cost Analysis: Table Two
Fixed Cost Amount
Call Center 35 million
Additional c/s 15 million
Advertising 18 million
Total Cost: 68 million
Our breakeven point to cover cost in this scenario becomes around 996,000 customers.
This is determined by taking total cost 82.4million/ per new c/s contribution 82.65.
Yet, adding in the cross services sold to additional customers and credit card sales to current
customers, even with 500,000 new customers targeted for credit cards in nine countries. The
goal of 500,000 additional services sold in these nine countries to include: Checking
Accounts, Savings and investments, loans, mortgages and Citigold priority banking will more
than cover our initial investment until the economies of scales issues take effect and our
credit card volume increases to over the one million mark. That's only 111,000 cards per
country. The initial investment and initial loss absorbed in the beginning of this endeavor is
well worth the future benefits and profits for Citibank in this emerging region of the world.