A Study of Citibank’s Marketing Strategy 1

1.0 Introduction

1.1 Key Issues

1.1.1 Competitiveness

Bank is a highly

complex entity operating in a cut-throat

industry

Competitiveness in this industry is unquestionable. Nowadays, pricing for

banking products are getting lower and lower and the consumers are the ones

benefited. Price war is happening from time to time in this industry which will

lead to a very slim of margin of profit for every player in the industry. The profit

margin is getting deteriorate for every players as well. Hence, this kind of

phenomena is not going to be sustainable for this industry in the long run. The

market of banking industry is getting more and more competitive due to all the

players in the industry that wish to increase their market share while the market

share is getting dense and the growth of progress is very limited.

1.1.2 Risk reduction

The Credit card facility is a high risk credit facility. The bank will create a

revolving account and grants a line of credit to the consumer to borrow money for

payment purpose or cash advance. Therefore, this kind of structure of financing

has attracted a lot of non-potential consumers. Problem was aroused when they

overspend and unable to repay for the credit used. According to the report on

News Strait Times on November 2011, out of 10 million credit card issue, only 30

percent of the people are able to meet their monthly repayment. This kind of

situation had cause the financier to bare the losses while on the other side, the

consumer will also declare bankrupt for unable to repay their debts. As a result,

this issue will create a negative impact to the society as well.

A Study of Citibank’s Marketing Strategy 2

1.1.3 Offer similar benefits of product

Besides that, majority of the players in the industry is offering the same

product with the similar benefits. So what makes Citibank so different from their

competitors? Besides pricing, how Citibank position their credit card in the

market to attract the right customers and increase the market share?

1.2 Ways to resolve

So, there is where market segmentation, targeting and positioning comes into the

picture to sort things out. The bank segment out their market, target the right customers

and tailor the products according their needs and make them feel that their product is

designed especially for them.

A Study of Citibank’s Marketing Strategy 3

2.0 Market segmentation

After went through the case studies, we found out that Citibank had segmented

their market wisely. It had used the four major variables for market segmentation which

included demographic, psychological, behavioral and geographical to segment their

market.

2.1 Demographic segmentation

Demographic segmentation can be divided into a few demographic values which

included age and life cycle, life stage, gender, income, generation, social class, race and

culture. In Citibank, credit cards are segmented using income and generation values.

2.1.1 Income segmentation

Income segmentation is the concept of dividing the market into various

income groups. For example, Citibank platinum credit card is specially designed

for high income consumers (RM60,000 per annum) while Citibank Gold credit

card and Citibank Clear card are designed for lower income consumers

(RM24,000 per annum).

2.1.1 Generation segmentation

Generation is divided in to four main generational cohorts which are Gen

Y (1979-1994), Gen X (1964-1978), Baby Boomers (1946-1964) and Silent

Generation (1925-1945).Each generation will be influenced by the times in which

they grew up. Marketers therefore market to a generation by using icons and

images that is relatable according to the generation (Kotler and Keller, 2009)

Citibank Clear card is designed to Gen Y. There are promotions like free entrance

from Tuesday to Saturday in Zouk Club Kuala Lumpur, one for one coffee in

Coffee Beans nationwide outlets and Friday one for one movie tickets. For

Citibank Gold credit card, the benefits like rewards points, gold travel (insurance),

gold SOS that required you to ask for help whenever petrol or car batteries run

down, gold healthcare and gold lifestyle that offers you preferential treatment and

discounts are more suitable for Gen X consumers.

2.2 Psychological segmentation

A Study of Citibank’s Marketing Strategy 4

Psychological segmentation included a few variables such as lifestyle, value and

personality traits. According to VALS framework, the four groups with high resources are

innovators, thinkers, achievers and experiencers while the four groups with low resources

are believers, strivers, makers and survivors. Citibank divided the society on the basis of

life-orientation.

2.2.1 Life-orientation

People who are traditional, passionate in work and self expression are

targeted. Citibank attracted people by providing benefits as people go thru the

routine of their work life. With or without those benefits, people will have to do

the same thing too. For example, outstation, refuel, shop for groceries et cetera.

These things have to be done even if without any rebates or cash bank in credit

cards. Those credit cards which are using life-orientation basis included

Shell-Citibank credit card, Giant-Citibank credit card, Citibank PremierMiles card

and Air Asia Citibank credit card.

2.3 Behavioral segmentation

In the behavioral segmentation, marketers divide buyers into groups based on

their knowledge of, attitude towards, use of, or response to a product. The variables used

in this type of segmentation include benefit sought, occasions, user status and usage rate,

buyer readiness, loyalty status and attitude. (Philip Kotler, 2012)In Citibank, it uses the

variable of benefit sought and occasion to segment the market for credit card.

2.3.1 Benefit sought

Benefit sought is widely used in the market because it can help to identify

the distinct market with clear market implication. Under this variable, consumers

are being divided into enthusiast, image seekers, savvy shoppers, traditionalist,

satisfied sippers and overwhelmed. The Citibank cash back platinum credit card is

specifically designed for the customers who are falls under the category of savvy

shoppers. Users of this type of credit cards can get rebates on daily retail spend

and also can enjoy 20% off on selected purchase in Coffee Bean. However, the

A Study of Citibank’s Marketing Strategy 5

Citibank Premium Miles and Air Asia credit card was designed for customer on

the basis of occasions.

2.3.2 Occasion buyers

Under the variable of occasion buyers are distinguished when they

develop a need or make a purchase or use a product. These two types of credit

card are suitable for people who need to fly frequently for business purpose or

traveling because users can redeem free flight ticket when they fly more.

A Study of Citibank’s Marketing Strategy 6

2.4 Geopraphic segmentation

Lastly, geographic segmentation divides the market into geographical units such as

nations, states, regions, countries, cities or neighborhood. Nielsen Claritas has developed

a geoclustering approach called PRIZM clusters which consists of young digerati,

beltway boomers, the cosmopolitans and old milltowns. Groupings in this cluster are

basically based on five broad categories such as education and affluence, family life

cycle, urbanization, race and ethnicity and mobility. (Philip Kotler, 2012) The purpose of

this segmentation strategy is to ensure that the products are tailor to the needs and wants

of local customers. In Malaysia, Citibank are targeting on customers who are

well-educated and having a middle high income. Thus, it is more concentrated on

customers from urban area especially areas like Klang Valley, who fall under the cluster

of young digerati, beltway boomers and the cosmopolitans. There are 6 out of the 11

branches of Citibank are located in this area. In addition, to strengthen its position in

Malaysia, it also set up mobility boots in various notable shopping centers to attract more

potential customers from different areas to use their credit cards.

A Study of Citibank’s Marketing Strategy 7

3.0 Target Market

A target market is a cluster of people that will mostly need or desire of the

products or services that provided by the company. Target market can be defined in terms

of a few values which included age, sexual orientation, gender, income, religion,

traditions or location. In order to get useful information, market segments must include

key criteria which are measurable, substantial, accessible, differentiable and actionable.

Measurable means that the size, purchasing power and characteristics of the segments

must be measurable so that the target can be identified. For substantial, the segment has

to be large enough to justify the resources. Besides, the segment must be accessible so

that messages can be distributed. The segments must be differentiable in term of the

response towards certain products. For example, if male and female response similarly

towards chocolates, there is no separate segments. Actionable criteria can be achieved by

conducting effective programs can be formulated to attract and serve the segments.

Markets can be targeted at four main levels which included mass segments, multiple

segments, single (niche) segments and individual segments.

As Citibank has a huge back support from Citi group, it tends to use multiple

segment specialization as a target market strategy in Malaysia to increase its revenue and

profit. Therefore, it comes out with a wide range of credit card which is suitable to be

used by all levels of people. The target segments include fresh graduate, working

youngster and low income people as well as high income businessman. To ensure they

target the right segment of people, Citibank clear card are tied with some of the specific

merchant such as TGV cinemas and Coffee Bean to attract more Gen Y card users. At the

same time, the Citibank Premium Miles platinum card are tied with golf club to give it’s

card holder privilege access to golf and also airport lounges to attract businessman.

A Study of Citibank’s Marketing Strategy 8

4.0 Conclusion

To put everything in the nutshell, Citibank has applied the right marketing

strategy in this case study in order to overcome the issues they are anticipating in the

industry. That is why they are the pioneers in the credit card market in Malaysia at the

moment. But, as time goes on,

Citibank will need to keep their segmentation market up to

date and do the right targeting of customer from time to time catching up

with the fast

evolving consumer market. Market segmentation is very important for fast moving

industry because every player in the industry has limited resources and time, by targeting

the right customer, resources can be utilized wisely in order to maximize the profit for the

organization.

A Study of Citibank’s Marketing Strategy 9

References

Citibank

Annual

Report

2010.

(2010).

Retrieved

June

13,

2012,

from

http://www.citibank.com.my/english/docs/pdf/citibank-financial-statement/Citibank

AnnualReport2011_full.pdf

Citibank Malaysia Branches

. (2012).

Citibank Malaysia

. Retrieved June 10, 2012, from

http://http://www.citibank.com.my/english/citi-branches/citi-11-branches.htm

Credit

Cards.

(2012).

Citibank

Malaysia

Retrieved

June

11,

2012,

from

http://http://www.citibank.com.my/english/credit-cards/index.htm

Marketing Strategies HSBC.

(2012, March 4).

Scribd

. Retrieved June 12, 2012, from

http://www.scribd.com/doc/87800769/Hsbc

Marketing Strategy And Launch Plan For Citibank Credit Cards In Asia Pacific.

(2011,

March

8).

Retrieved

June

12,

2012,

from

http://allfreepapers.com/Business/Marketing-Strategy-Launch-Plan-Citibank/1384.

html

Philipe Kotler, & Kevin Keller (2012).

Marketing Management

. (14th ed.). Pearson

Education Limited.

Rozanna Latiff , & Roy See Wei Zhi (2011, November 14). Easy cash turns many into

bankrupts.

News

Straits

Times

Retrieved

June

12,

2012,

from

http://www.nst.com.my/mobile/top-news/easy-cash-turns-many-into-bankrupts-1.5

518

Zaherawati Zakaria, Mohd Zool Hilmie Mohamed Sawal, Kamarudin Ngah, & Zaliha Hj

Hussin (2012). Bankruptcy among Young Executives in Malaysia. In

2012

International Conference on Economics Marketing and Management

. Retrieved

from http://http://www.ipedr.com/vol28/26-ICEMM2012-T10012.pdf

Citibank Marketing Strategy

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