Like many other product categories in China, the credit card
industry is booming.
Today it is estimated that more than 40 million credit cards are
in use in China, compared with less than 3 million in 2003.
The main drivers of this upsurge are obvious - economic growth,
income increase, the development of organized trade and
urbanization. These are not unique to credit cards and are also the
drivers of many other product categories.
Despite the growth, in today's context there are several factors
that the industry needs to worry about. How long will this boom
last? How do I deal with fierce competition? How do I make the
consumer spend more on the card? And how do I retain the consumer?
Most importantly - how do I make a profit in this market?
Most of these questions are related to the challenge of
establishing credit cards as a brand in the market. The market has
already accepted the credit card as a product, but when there is no
loyalty, when consumers easily abandon one credit card in favor of
another for a free gift, it implies they have not accepted a
particular credit card brand.
And until that is achieved, the industry will always be faced
with a fickle consumer. By building loyalty with a select group of
consumers, the companies will also increase their profitability. So
one of the biggest challenges facing the industry today is how to
establish credit cards as a brand in China.
Consumer needs
Branding is a challenge for credit card operators wanting to
differentiate their product from others. The starting point is
establishing a very good understanding of consumer needs. With over
40 million cards, and growing exponentially, it is unlikely that
the market will be homogeneous. Credit card companies need to
segment the market, decide which segments they want to cater to and
offer specially designed and targeted products for each
segment.
While this sounds like the logical and almost obvious thing to
do, there are several considerations that need to govern the
marketers' actions.
When considering consumer needs for credit cards, the most
obvious is the basic functionality including wide acceptance, high
credit limit, low or no annual fees and so on. However, consumer
needs for credit cards are complex and operate at several different
layers. At the outermost layer, there are the functional needs.
However there are two additional layers of consumer needs that need
serious consideration. Credit cards can be a social status
indicator. Card branding enables a consumer to express their social
status: successful, affluent, modern or even fashionable. Credit
cards need to exude the right social imagery for the right segment
of customers. In doing that, the banks need to be innovative and
need to go beyond the obvious imagery of status and class, and the
corresponding clichd offer of gold and platinum cards.
Green cards
For instance, in the current context, environmental awareness
and consciousness is becoming so important, that there is likely to
be an excellent market for not just a gold or a platinum card - but
a green card - a card which supports environmental projects, and
projects the consumer as an intelligent and responsible citizen.
Deep down we as consumers have strong emotive needs, and look to
brands to satisfy these needs. These needs could be a need for
control, a need for thrills and excitement or a need to bond or
feel protected. Again by appropriately segmenting the customers,
the banks need to create the right image and personality for their
brand, which fits in with the emotive needs of the consumer segment
they are targeting.
The banks also need to look innovatively at the functional
needs. Like other visible products, credit cards can be a
reflection of the user's personality. The card, therefore, not only
needs to help the consumer buy things, but it also needs to be an
attractive and interesting piece of plastic that the consumer is
happy to carry and exhibit. Normally one would not associate looks
or fashion with credit cards - but the fact is that by having the
right kind of appearance, a card could develop strong
identification and bonds with consumers.
Lastly, sometimes functional needs can be merely surrogates for
emotional needs. For instance, if you talk to Chinese credit card
consumers, a high credit limit is invariably mentioned as an
important requirement in a card. However, when you try to probe
further, it emerges that the credit limit is actually a reflection
of their status and self-recognition and also a source of security.
The implication is that the marketers need to cater to the
underlying true needs - and if a high credit limit is a problem,
they can cater to the hidden emotive need in a different way.
Retaining customers
Today credit card customers look at the card as a piece of hard
plastic, which helps them buy goods and gives them rewards. The
evaluation of brands is also on these parameters, and they will
happily discard one in favor of another, if it promises better
gifts or more rewards. Credit card issuers have not invested much
to reach to the consumers and establish a broader and stronger
relationship, which is based on an understanding of their needs in
all its dimensions. The success of this business in China
critically hinges on the credit card issuers' ability to develop a
bond with the consumers, a relationship that extends beyond the
functional attributes and embraces the emotive needs.
(China Daily December 12, 2007)
