Management Decision problem

The decision problem can be described as:

1. Does the reward point system encourage customers to spend more through credit
cards?
2. If yes, what kind of reward point system should a new entrant (bank) provide to
improve credit card spending?
Marketing Decision problem
Broadly speaking, the focus will be to analyze the existing reward point systems provided by
major credit card providers in India and identify the factors that influence credit card
patronage.
Given the context, the research problems can be defined as mentioned below.
To assess the current market and identify various customer segments based on
demographic and psychographic characteristics.
To analyze the benefits that customers feel about using credit cards.
To identify the reward point systems/incentives offered by different credit card
providers in India.
To understand how such incentives influence customer spending and determine
whether the incentives/reward point systems induce loyalty towards a particular credit
card.
Information needs
1. For conducting market study
a. Market shares held by major players in the credit card industry.
b. Credit ratings and average default rates of borrowers associated with a
particular credit card provider.
c. Credit card annual fees, OCL fees (Over Credit Limit) and delinquency fees,
duplicate card issuance fees, secondary services fees etc.
2. For analyzing the existing cards and associated reward point systems/schemes offered
a. Different cards available
b. Monetary benefits with each card
c. Special offers - gifts/coupons/vouchers
d. Privileges
3. Transaction fees
4. Fees Card lost, new cards, interest: revolver and transactor

Variable specifications
Demographic variables
Income, Age, Education, Sex
Psychographic variables
Perceptions choice set (comfortable, fast, convenient, easy to use, preferred by users,
preferred by stores, safe, control over money)
1. Annual credit spend
2. Category-wise spend
3. Credit limit
4. Wallet share
5. Credit cards:
6. Branded cards: 1 reward point every 40 to 100 rs spend
7. Partner cards: 1 mile/1rs of fuel for every 100 rs spend
8. Store cards: 5%-10% discount for the usage of card in-store
9. Payment choices/methods
10. Revolve or transaction of customer
11. Grace period
12. Minimum Due
13. Customer interest in
14. Assessment of reward point programs available
15. Popularity of reward point
16. Variety Banks offering
17. Assessment and popularity of other options available
18. Preferred usage of credit cards over debit card transaction


Research Plan
Secondary Data
Online,
Primary Data
Qualitative Research/ Conclusive:
Quantitative Research/ Exploratory
In-depth Interview: Citibank, ICICI, VP of HSBC,
Survey:
IIM Students: PGPX
Faculty
People in Ahmedabad
Online survey
Plan for data analysis:
We will assess the impact of each reward point on the sales or revenue generation by the
banks,
Methods to perform the data analysis will include analysis of variance, t test and Chi-Square
test.
Following hypothesis will be checked:
H0: All reward point programs are treated on a similar level by the customers.
H1: There is difference in customer interest when it comes to reward point programs.



1. To analyse the different impact of each reward point on the sales or revenue
generation by the banks
2. Attributes of the rewards point might be responsible for the difference