MARKETING 611
SECTION 005
CITIBANK INDIA CASE
Learning Team A5: Mohammad Al-Ali, Greta Carlson,
Patricia Ligon, Scott Schultz, Mike Xu, Max Young

Word Count: 1496

In assessing the marketing strategy of Citibank India’s credit card business, Harpreet
Grewal is faced with two choices: maintain the current strategy, with its higher margins but shrinking growth opportunities, or expand into new target segments/geographies with their attendant challenges and uncertainties. He would likely find that a new product launch is justified. While Citi’s position in the super-affluent/affluent segment remains strong, its falling market share combined with the growth of the emerging affluent (E.A.) and mass market suggest a change may be worthwhile.
Running a contribution analysis on each segment (Exhibit B) provides more insight. There are, of course, important assumptions underlying this analysis, which are footnoted in Exhibit B. Key findings include:








While the E.A. customer offers a lower unit contribution (margin) of INR 4,000 (37%) than super-affluent’s INR 13,700 (45%) or affluent’s INR 9,420 (45%), it is still an attractive opportunity
CLV is from INR 12,000-18,000 for an E.A. consumer even assuming an industry-average
12% attrition rate and a 10% discount rate, implying that spending even the INR 5,000 high-end estimate for customer acquisition would be profitable for this segment.
Breakeven cannibalization rates are around 30% for the super-affluent and 43% for the affluent – these seem acceptable given the product differentiation in terms of rewards and marketing.
From an efficiency ratio perspective, E.A. consumers in the top 8 cities will provide a better ratio than super-affluent/affluent consumer in other regions (63% vs 73%)

The other alternative – expanding into other geographic regions – is irreversible, comes with significant upfront investment costs, may be opposed by the RBI, all in pursuit of a small group of customers who live in areas where merchants are far less likely to accept credit cards.
Combined with inferior quantitative metrics (see Exhibit 2), expanding to other urban and rural affluent consumers are