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HSBC Credit Card Reward Program
6 April 2010
AsliMarceloPaolaTed
Summary
2
Company profile & mission 1
HSBC 4 P’s 2
Credit Card Market in Honk Kong 3
Situa@on audit – Rewards program 4
SWOT 5
Problem/Decision statement 6
Alterna@ves 7
Cri@cal issues 8
Analysis & Mul@-‐ARribute Chart 9
Recommenda@ons 10
Louisa
3
1865: Named after Hong Kong & Shangai Banking Corporation
Limited was established.
1993: Headquarter in London.
1998: `Your world of finance services.`
2001: `The World’s local bank.`
2005: More than 9,800 offices in 77 countries Europe, the Asia-Pacific, the Americas, the Middle- East and Africa.
Company Profile
Company Mission
4
5 core business principles:
outstanding customer service effec:ve and efficient opera:ons strong capital and liquidity economical lending policy technological infrastructure and service packages
HSBC 4Ps..
5
Products
Promotions Price
Place
• Credit card, • Loans, • Insurance & Investment promo:ons and • Services
• Generic cards • Co-‐ branded affinity cards • Private label cards.
• Retail stores • Restaurants • Shopping stores • E-‐ commerce channels
• Classic • Gold • Premier
• Pla:nium
Credit Card Market in Hong Kong
6
• Usage of credit card growing rapidly.
• 1998 – 2003: Number of transaction 112%
Value of transaction 68%
• Wider acceptance of credit cards in retail outlets. • The ability to do low-value transacations. • The growth in e-commerce.
Reasons
7
Situation audit – Rewards program
1995-1996
1997-1998
1999-2001
2002-2005
Early years
• First point-based loyalty programs introduced. • Cardholders earned bonus points and used them to redeem against a selection of items from the catalogue.
8
Situation audit – Rewards program
1995-1996
1997-1998
1999-2001
2002-2005
The Downturn
• Redemption items went out stock because of supply issues. • Products become outdated. • Long waiting periods for redemptions. • Competitors began offering cash vouchers.
9
Situation audit – Rewards program
1995-1996
1997-1998
1999-2001
2002-2005
Recovery
• Began expanding its market share and usage rate of campaigns. • New catalogues were issued. • Customer’s perception improved
10
Situation audit – Rewards program
1995-1996
1997-1998
1999-2001
2002-2005
Best-in-Town
• Cash multiplier • Rewards multiplier • Point share within friends and family. • Special of the month items (%40 discounts) • In 2003, online redemption service was launched. • The ability to pay income taxes with HSBC credit cards.
SWOT
11
Strength
• Profitable from issue Credit Card
• Awareness to the customer
• Partnership with Hong Kong merchants
• Interna:onal Finance • China Market
Weakness
• Huge costs involved • Record profits ending • Complexity usability of the program
SWOT
12
Opportuni:es
• Gaining a larger share of receivables
• Be aware of the cost • Revolvers segment
Threats
• Direct cash-‐rebate and instant redemp:on systems
• Commodi:za:on of rewards programs
• Email viruses
Problem/Decision statement
13
How HSBC sustain its leadership in terms of market share and
customers percep1ons,
increase the balance of revolvers
and did not significantly raise costs
Op@on 2 Low communica:on
+ Differen:ated benefits
Status quo Low communica:on
+ Standard benefits
Op@on 3 High communica:on
+ Differen:ated benefits
Op@on 1 High communica:on
+ Standard benefits
Communica@on of the program + benefits
high low
Bene
fits of th
e program
differen
:ated
standard
14
Alternatives
Critical issues
Overall costs Customer percep@on Market share
ARrac@veness Awareness
brand
rewards program 15
Critical issues
Overall costs • Communica:on expenses • Larger number of redemp:on items • Bigger rewards for a given level of spending
25%
Cri@cal Issues Influencers Weight
Customer percep@on • Communica:on efforts: posi:oning, campaigns, etc • Benefits offered from the program
12.5%
Market share • Communica:on efforts and benefits offered from the program focusing in “revolver” segment
12.5%
ARrac@veness
• Direct cash rebates or instant cash back • Broad selec:on of rewards • Easy to understand • Differen:a:ons and improvements
25%
Awareness • Media and non-‐media efforts to communicate the rewards program and its benefits
25%
BRAND
REWARD
S PR
OGRA
M
16
Analysis
Op@on 2 Low communica:on
+ Differen:ated benefits
High costs related to new benefits
Good customer percep:on
Leadership, but stable market share
Differen:ated a[rac:veness of the rewards program
Regular awareness of rewards program
Status quo Low communica:on
+ Standard benefits
Low overall costs
Good customer percep:on
Leadership, but stable market share
Regular a[rac:veness of the rewards program
Regular awareness of rewards program
Op@on 3 High communica:on
+ Differen:ated benefits
High overall costs
Higher customer percep:on
Leadership and increasing market
share
Differen:ated a[rac:veness of the rewards program
Higher awareness of rewards program
Op@on 1 High communica:on
+ Standard benefits
High costs related to communica:on
Good customer percep:on
Leadership, but stable market share
Regular a[rac:veness of the rewards program
Higher awareness of rewards program
17
Analysis
Op@on 2 Low communica:on
+ Differen:ated benefits
High costs related to new benefits
Good customer percep:on
Leadership, but stable market share
Differen:ated a[rac:veness of the rewards program
Regular awareness of rewards program
Status quo Low communica:on
+ Standard benefits
Low overall costs
Good customer percep:on
Leadership, but stable market share
Regular a[rac:veness of the rewards program
Regular awareness of rewards program
Op@on 3 High communica:on
+ Differen:ated benefits
High overall costs
Higher customer percep:on
Leadership and increasing market
share
Differen:ated a[rac:veness of the rewards program
Higher awareness of rewards program
Op@on 1 High communica:on
+ Standard benefits
High costs related to communica:on
Good customer percep:on
Leadership, but stable market share
Regular a[rac:veness of the rewards program
Higher awareness of rewards program
18
“OK, SINCE WE ARE THE LEADERS
LET’S KEEP EVERYTHING THE
WAY IT IS…”
“I DON’T WANT TO BE STANDARD, BUT I ALSO CAN’T SPEND A LOT OF
MONEY…”
“I WANT TO BE DIFFERENT AND THAT EVERYBODY KNOWS ABOUT ME. SHOW ME THE MONEY!!!”
“EVEN CONSIDERING THAT OUR REWARDS PROGRAM PROVIDE STANDARD
BENEFITS, LET’S AT LEAST MAKE THE CONSUMERS KNOW MORE ABOUT IT…”
Multi-Attribute Chart
Cri@cal Issues Weight Status quo Op@on 1 Op@on 2 Op@on 3
Overall costs 25% 1.0 0.5 1.25 0.25
Customer percep@on 12.5% 0.6 0.5 0.75 0.625
Market share 12.5% 0.5 0.5 0.5 0.625
ARrac@veness 25% 0.75 0.75 0.5 1.25
Awareness 25% 0.75 1.25 0.75 1.25
Total 3.5 3.5 3.75 4.0
19
Recommendations
20
Increase the budget related to the rewards programs
Reduce costs in the future
21
Recommendations
Surveys
Provide a mix of redemp:on catalogues + instant
redemp:on program
CSD
22
Recommendations
Online pla\orm for the rewards program
Online catalogues
Extend the validity of points for 5 years
Iden:fy the “revolvers” in the customers database
AsliMarceloPaolaTed
Thanks!!!