ANZ Student Credit Card - Case Study Example

 ANZ Student Credit Card Student credit card is a new financial service being offered by banks in Australia for Australian and international college students. Student credit cards are considered to be useful in paying tuition and education related fees such as books and school supplies. It is also being considered by this marketing report common debt problems facing students, particularly in paying. The Australia and New Zealand (ANZ) Banking Group (Ltd.), which currently do not provide such service for students, plans to introduce and market a student credit card that is unique, innovative, and student-friendly. Since the intended market are students who may be 16 to 21 years old, the proposed product is designed to assist incoming college students in their studies. The student credit card has been designed by keeping in mind student buying behaviors and credit card usage. Thus, the strategy of putting the product in the market would implement a campaign aimed at increasing awareness about proper financial management. About ANZ: The Melbourne-based Australia and New Zealand Banking Group Ltd is one of the largest banks in Australia that offers wide-range of products and services offered to retail, small businesses, corporate, and institutional clients. In its latest financial report in September 30, 2010, ANZ said it earned US$13.9 billion in revenues and US$4.5 billion in net income (Yahoo Finance, 2011). Among its services include among many others the consumer credit cards, electronic payment products, ATM services, personal loans, transaction banking and saving products, and other financing products. The bank also provides other forms of financial transactions, such as insurance, providing of working capital solutions, project financing, and more. ANZ was founded in 1835 (Yahoo Finance, 2011). In the mortgage market, ANZ' commands one of the biggest share with Commonwealth Bank of Australia and Westpac Bank holding a combined 56 percent of the market growth in February last year. In the same month, ANZ was considered the fastest growing major with $1.54 billion (The Adviser, 2010). The Product: ANZ Student Credit Card A student credit card is a popular financial service but it is often claimed as disadvantageous for students, who may not already be financially-capable of paying debts. The challenge here is to market a student credit card that would make students feel smart about having one because they are educated about managing finances. With numerous student credit cards in the Australian market today, ANZ Student Credit Card will be differentiated from the others by focusing on low to zero annual fee, reasonable interest fees, and credit limit ranges. In this regard, the ANZ Student Credit Card is designed to be student-friendly with an annual fee that is waived for the first year instead of a 55-day interest-free on purchases that the competitor banks offer. The following year or so, ANZ designed the student credit card to give lower interest rate than offered by competitor banks. To do so, we will give a ten percent lower interest rate from 20.24 percent to 18.22 percent only. The purpose is to allow students to experience spending on their own and paying on their own when they take part-time jobs. In turn, students will be proud to have used their student cards in paying tuition fees and other school related expenses as a symbol of independence and gaining credit credibility history. Target market of the student credit card are college students, starting at 18 years old although applications by 16 years old may be approved on the condition that they have a guarantor from their family and they have a six-month contract with an existing part-time job. Current Market Conditions To further increase its market share, ANZ launches a student credit card to satisfy the prospective customers than prioritizing competition. With the product student credit card, such will differentiate ANZ from its competitor banks offering the same product by becoming the first to provide a student credit card with the most student-friendly rates, including campaigns that will increase students' awareness about financial management of student debts. Competitive Environment There is an increasing competition between financial, non-bank financial institutions and investment fund companies with regard to the sale of credit cards as companies innovate with the help of modern technologies. Online advertising and marketing also helped increase these companies market share quickly. This level of competition was particularly evident among the four major banks by offering new and improved products. The concerns these competitor banks was about customer loyalty than maintaining customer base than attracting new customers. As new regulations were passed beginning 1985, most banks and non-bank financial institutions saw growth when most entry requirement policies were relaxed. The new regulations also attracted foreign-owned banks to penetrate the financial market because of the relaxed entry requirements. Competitor Analysis ANZ CBA Westpac Age Requirements 16-24 years old 18-24 years old 18-24 years old Interest-free days 365 days 55 days 55 days Credit limit $500.00 for beginning account $400.00 for beginning account $400.00 for beginning account Annual fee $0 annual fee during the whole course of 2-year studies $30 annual fee, waived in the first year. (Creditcard.com.au, 2011) $30 annual fee (Consumerbadcreditcard.com, 2011) Phone/internet banking √ √ √ Secure/internet shopping √ √ √ Enhanced security chip protection √ √ √ Interest rate 18.22% on purchases 20.24% on purchases 20.24% on purchases SWOT Analysis Through a method called SWOT analysis we can delve deeply into ANZ’s micro and macro environments that can influence the marketing of the student credit card. As such, we will look into the strengths and weaknesses, as well as threats to its market dominance, and then the opportunities that can serve as guide to achieving its long-term vision of consistent leadership in its industry. Strengths ANZ is considered one of the top four in the Australian financial banking sector, with substantial resources, credibility and high reliability and goodwill in the market. Its reputation will help launch the new product. Although new, the student credit card is not hard to market because it targets students who are very much in need of financial assistance. Entry requirements are very flexible and student-friendly, including interest-free days, annual rates, and more. Weaknesses The very flexible rates could also mean bad financially for ANZ as this may slice away market margin. Other credit card types in the market, including its competitor in the student credit cards, are already offering similar offers, which could mean ANZ have an unfair disadvantage in giving offers. The economic uncertainty can also be counted as a factor. Innovation is still not very much prioritized. Opportunities There is a promising student credit card market as more and more students are wishing to complete their degrees in college. Students, who are becoming more tech-savvy, are becoming more social and can help in promoting the product to their network of friends through social media marketing (e.g., Facebook, Twitter). There is also bigger opportunities by investing in research, innovation and online advertising. Threats The flexible interest charges and other payment modes offered by competitors should be looked as threat. And as competition intensifies through more relaxed regulations and laws, the student credit card market may shrink. There is also the risk of government interference and regulatory policies as some students who may not be able to pay debts increase. Online spoofing or email forgery/fraud that undermines customer confidence. Academic and political pressure may mount against the promotion of credit card use among students, claiming such promotes reckless spending. Strengths Brand values are trusted by customers for its reliability, reputation. Substantial resources. Getting a credit card is easier and more flexible than competitors. Weaknesses Flexibility of interest rates, annual fee rates, and other factors will keep slicing away market margin. Economic uncertainties. Too many credit card options already that can confuse customers to choose which better credit card to take. Opportunities Promising student credit card market. Youth are tech-savvy, and willing to embrace online transactions. Flexible rate and rewards scheme is lucrative. Bigger investment in innovation, research and online advertising. Threats Flexible rate wars. Risk of shrinking student credit card market as competition intensifies. Aggressive marketing and promotion by competitors. Changing spending habits of students. Economic uncertainty. Risk of governmental interference, regulatory policies (e.g.,) Online spoofing or email forgery/fraud that undermines customer confidence. Academic and political pressure against credit card use of students. Issue Analysis The main focus of this issue analysis is the marketing of the product. Individually, these are: Launch/introduction The launch will be aided by research and development which Ishikawa and Tsujimoto (2008) argued is helpful in coming up with a successful launch. Since the student credit card is new, we should remember that such product is new and proper research should accompany the launch. Promotional Activities Choosing the media to be used in advertising the proposed product is critical in launching a new product, taking into account the customer type. In consideration of the intended market, which are tech-savvy, the use of online media should be added along with television, magazines and radio as promotional tools. Another highlight of the promotional activity is the launch of a campaign that aims to increase the students' level of awareness about financial management. Bank's Benefits One of the benefits that the launch of the product is the increased market share and increased number of new customers for ANZ (Deal4loans.com, 2011). Profitability-wise, ANZ will benefit from the inflows of funds into the product, which can be a cheap source of funding ANZ's other banking and financial products, such as the student credit card. When cash at hands become more easily available for ANZ, operational activities can be run smoothly. Read More