In the case of Citibank India, the bank is many problems; however, the following problems are severely affecting the bank in the type of service they provide. The major challenge being whether they should redefine their business objectives by changing their current target market. While, the secondary problem being lack of partnerships with stores to give the consumer the option to collect loyalty points.
The primary problem of market segmentation arises because the bank is not targeting all types of consumer markets in India. The bank separates its consumers into four types of consumer segments; super-affluent, affluent, emerging affluent and mass market. The first two segments consist of families with high-salaried income and the last two segments consist of households with self-employed individuals.
Currently, the bank has a strategy of targeting the high-salaried households as they have the ability to spend significantly more than the mass-market. This segment, the super affluent and affluent only consists of about 15 million households, and it is very saturated as it has slow growth rate. While, on the other hand, the self-employed individuals tend to spend less compared to the high-salaried individuals, however they make up more than 50 million households. This consumer segment is growing and with the rising household disposable income, they are going to have more spending power by 2015. Other foreign banks in India also segment their consumer; however, they provide services to all of the four consumer segments. As these banks have realized that current consumer trend in India, and know that adapting the consumer trend is only going to benefit the bank.
Banks build partnerships with stores to give consumers the opportunity to use their credit cards in the partnered store to collect loyalty points. Consumers can later on redeem these loyalty points to get