proposal thesis, debit card and credit card promotions

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Credit card and Debit Card promotions for retail brand outlets

Who is in profit?

By

Mohsin Rahim (1235253)

Mohammad OvaisAslam(1135251)

MBA Evening (36 credit hours)

Thesis

Fall 2014

Research Advisor

Mr. Hammad Masood

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Chapter 1: Introduction

1.1. Background

Today the concept of any product offering revolves around the comfort and satisfaction of consumer, and making goods available for them to purchase. The use of debit and credit cards has become widespread among the masses. According to the figures of State Bank of Pakistan, More than 1 million people are making use of credit cards in every walk of life. Credit and Debit cards provide convenience to consumers in shopping, dining, travelling and making online purchases without any hassle. The inception of electronic commerce has brought many changes in the preferences of consumers. In this fast moving life, credit and debit card play pivotal role in meeting the financial needs of the people. Commercial Banks in Pakistan announce enticing promotions on the use of these cards at various retail brands outlets. Every now and then banks announce new promotions and discounts on the use of these cards to allow consumers to spend money and avail discounts on shopping, dining and so on. Banks enter into various partnership agreements with retail brand outlets to increase their business. Moreover, retail brands also find it an easy way to increase their sales through various card promotions. Most prominent retail outlets and restaurants in Karachi such as Meat One, Khadis, Butlers Choclate Café, BBQ tonight, Alyanto and others have formed strategic partnerships with a multitude of commercial banks in order to facilitate them by providing discounts to their customers.

1.2. Problem Statement

With reference to the discussion above, we see that there is a need for a framework that describes and evaluates the relationship between the bank, the branded outlet and the consumer to see who is making most of it, the motivation for banks to form these strategic alliance; and the roots of co-branding in sales of the two associated brands, keeping in mind the strategic advantages being offered to both i.e. the banks and brands. Therefore, the

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The problem statement is divided into two parts. Firstly, the research will look at strategic partnership decisions made by companies’ who have sought alliance with banks and the vice versa. This part of the research will determine what factors companies/banks have to consider before seeking a long-term alliance and how do those factors influence their partnership decisions.

Secondly, since a credit card and debit card is a banks product, it will only be appropriate to take into account sales aspect from banks’ perspective. Therefore, the research will encapsulate changes in trends of sales revenue and customer base after the introduction of credit cards and debit cards promotions by the respective bank such that growth patterns can be traced. So that in the end it can be concluded that who is making the profit from these promotions and discounts, the bank, branded outlet or is it the consumer only.

1.3. Objectives

The purpose of study is:

 To examine the growth trends in market share of the bank as a result of co-branding on credit cards and debit cards. Simultaneously, we will study the variables of customer loyalty that are influenced by co-branding in credit cards and debit cards such as repeat-purchase.

 To discuss the performance of credit cards/debit cards in Pakistan in terms of sales revenue. Also, the research will discuss impacts of this alliance branding on the customer-base of both the brands under alliance

 To study the motivation for the banks to provide such large discounts on purchases done at certain retails stores.

 To find out how do banks earn from these promotions and discounts

 To analyze the selecting and decision making process of banks in terms of discount rate and selection of brands to align with.

 To increase the awareness of the consumers about the whole process of promotions, it’s costing and increases their knowledge by our research report.

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1.4. Justification

This research will be conducted to study in order to have a detailed insight on the branding alliance done by banks with large Retail outlets, Restaurants e.t.c for offering discounts and other promotions for a certain credit card holder, also to educate the consumers about the pricing strategy of the banks and the retail outlets as to who bears the cost of these promotions and in what ratio. The study will also determine the factors due to which the discounts offered are different for credit cards of the same bank and how are those rates calculated. There hasn’t been any detailed research conducted in past on why do a single bank needs to offer promotions to its consumers of credit card so that they can avail discount by shopping at retail outlets, what and how much banks gain from that transaction if any.

Also this study will give a brief overview of credit cards and offerings of multiple banks in terms of credit card limit, discount offers, number of outlets where one can avail these discounts e.t.c. which will help the consumers to understand the products and the pricing mechanism. Apart from that it will be a research paper which will be beneficial for organizations and the stakeholders as the research will study the subject of credit cards and all the mechanisms related to it so that it becomes simple for consumers to choose and decide as to which product suits them more.

1.5. Limitations

Following are few limitations of our research:

 We will conduct the research only in Karachi city.

 Limited time constraint, as we have only time period of 4 months for this research

 Banks might not share complete information with us as some of it might be confidential.

 The financial data gathered from the companies is strictly private and confidential and not to be quoted on a public forum, therefore the figures that will be used will be a representation of the original data but may not be quoted as-it-is;

 The study is limited to the chosen credit cards only;

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from these commercial banks as it does not apply to the whole population. We will also try to contact some to executives in the chosen banks to get their perspective regarding the offering of promotions and discounts to different brands in different areas.

1.7. Assumptions

In this research, we have assumed that the credit and debit cards facility is availed by only those individuals who have monthly income of more than 50000 PKR, it is also assumed that the banks, consumers and the executives in their interviews will provide us accurate information which is the requirement of this research. Also we have we have assumed that the bank managers will give us appointments and their through feedback on the questions that we will ask.

1.8. Significance of the Study

After studying various secondary tools such as journals and articles, it was observed that few research has been done on the frozen foods category in Pakistan. Keeping in view that Pakistan is a very lucrative market especially in the fast moving consumer goods; we decided to conduct the study in order to re-invent the shopping experience to align with shopper perceptions and behaviors.

The shopping pattern has evolved overtime, changing the way shoppers shop, yet close observation and study of their path to purchase can yield us many useful insights Rubin, R. (2012, July 2012). This study will help us re-invent the shopping experience to align with shopper perceptions and behaviors. The study will also identify the barriers that exist when shopping for frozen foods. The recommendations will suggest how can marketers and retailers work together to overcome those barriers. This report tends to examine the market for frozen food products, focusing on the products being sold through retail stores. The study will also identify the triggers and barriers that exist when shopping for K&N’s ready to cook range in the frozen foods category.This will assist K&N’s to identify the necessary factors pertaining to gaining or losing a consumer in the ready to cook segment.